________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 17, 1996
ATLANTIC BEVERAGE COMPANY, INC.
(Exact name of registrant as specified in its
charter)
Delaware 0-22614 36-3761400
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
(Address of principal executive offices)
42002
(Zip Code)
(847) 480-4000
(Registrant's telephone number, including area code)
1587 Sulphur Spring Road, Baltimore, Maryland 21227
(Former name or former address, if changed since last report)
________________________________________________________________________________
Exhibit Index is on page 3.
________________________________________________________________________________
<PAGE>
INFORMATION TO BE INCLUDED IN THE REPORT
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
On October 17, 1996, Atlantic Beverage Company, Inc. (the
"Registrant"), through a newly-formed wholly-owned subsidiary, acquired the
sausage manufacturing and distribution business of Grogan's Sausage, Inc. and
Grogan's Farm, Inc. for approximately $1.9 million in cash and notes and 573,810
shares of common stock of the Registrant.
On September 27, 1996, Atlantic Beverage Company, Inc. (the
"Registrant") entered into an asset purchase agreement with Grogan's Merger
Corp., a Delaware corporation and wholly-owned subsidiary of the Registrant (the
"Subsidiary"), Grogan's Sausage, Inc. ("Grogan's"), a Kentucky corporation and
Mr. and Mrs. Grogan, the sole stockholders of Grogan's whereby the subsidiary
agreed to acquire certain of the assets of Grogan's for $509,000 in cash. By
separate agreement of the same date, the Subsidiary also agreed to purchase
certain real estate related to the business of Grogan's from Mr. and Mrs. Grogan
for a purchase price of $1,000,000.00. On October 1, 1996, the Registrant
entered into an agreement and plan of reorganization with the Subsidiary,
Grogan's Farm, Inc., a Kentucky corporation and Mr. and Mrs. Grogan, the sole
stockholders of Grogan's Farm, Inc. whereby Grogan's Farm, Inc. was merged with
and into the Subsidiary. All of the outstanding securities of Grogan's Farm,
Inc. were exchanged in the merger for 573,810 shares of common stock of the
Registrant, $391,000 in cash as well as a note in the principal amount of
$200,000. The note accrues interest at a rate of 8% per annum and is payable as
to interest only commencing December 31, 1998. Principal is due September 30,
2001.
On October 1, 1996, Grogan's Merger Corp. entered into a one-year
employment agreement with Mr. Grogan whereby Mr. Grogan will receive an annual
base salary of $50,000 as well as a discretionary bonus and other benefits. The
employment agreement imposes certain non-competition and non-solicitation
restrictions on Mr. Grogan following termination of his employment and
relationship with the Registrant.
In connection with the foregoing merger and acquisition of assets, the
Registrant entered into a Second Amendment to its Loan and Security Agreement by
and among LaSalle National Bank, Carlton Foods Corp., Prefco Corp., Richards
Cajun Foods Corp and the Subsidiary. Under the Second Amended Loan and Security
Agreement, the Registrant and these other entities executed a term note in the
amount of $1,550,000. The note is payable in monthly installments and is due on
March 15, 2001.
2
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The financial statements required by Item 7 are not available and will
be filed under cover of Form 8-K when they are available, and, in any event,
within sixty days of the date of this report.
b) Exhibits
The following Exhibits are filed herewith
Number Title
2.14 Asset Purchase Agreement dated September 27, 1996 among
Grogan's Merger Corp., as Purchaser, the Company, as
owner of the capital stock of Grogan's Merger Corp., and
Bobby L. Grogan and Betty Ruth Grogan, as Seller.
2.15 Real Estate Purchase Agreement dated September 27, 1996
among Bobby L. Grogan and Betty Grogan, as Sellers and
Grogan's Merger Corp., as Purchaser.
2.16 Employment Agreement dated as of October 1, 1996, between
Grogan's Merger Corp. and Bobby L. Grogan.
2.17 Agreement and Plan of Reorganization dated as of October
1, 1996 among Grogan's Merger Corp., as Subsidiary, the
Company, Grogan's Farm, Inc., as GFI, Bobby L. Grogan and
Betty Ruth Grogan, as Sellers, with GFI and Owners, the
Selling Parties.
2.18 Second Amendment to Loan and Security Agreement dated as
of October 17, 1996 among LaSalle National Bank, as
Lender, the Company, Carlton Foods Corp, Prefco Corp.,
Richards Cajun Foods Corp. and Grogan's Merger Corp., a
Borrowers.
2.19 Second Amendment to Stock Pledge Agreement dated as of
October 17, 1996, among the Company, as Pledgor, and
LaSalle National Bank, as Lender.
3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ATLANTIC BEVERAGE COMPANY, INC.
Dated: November 1, 1996 By: /s/ Merrick M. Elfman
--------------------------
Merrick M. Elfman, Chairman of the Board
4
<PAGE>
EXHIBIT 2.14
<PAGE>
EXECUTION COPY
ASSET PURCHASE AGREEMENT
DATED SEPTEMBER 27, 1996
AMONG
ATLANTIC BEVERAGE COMPANY, INC.,
GROGAN'S MERGER CORP.,
GROGAN'S SAUSAGE, INC.,
BOBBY L. GROGAN
AND
BETTY RUTH GROGAN
<PAGE>
EXECUTION COPY
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "AGREEMENT"), dated the 27th day of
September, 1996, by and among GROGAN'S MERGER CORP., a Delaware corporation
("PURCHASER"), ATLANTIC BEVERAGE COMPANY, INC., a Delaware corporation and the
sole stockholder of Purchaser ("ABEV") and GROGAN'S SAUSAGE, INC., a Kentucky
corporation ("SELLER") and BOBBY L. GROGAN and BETTY RUTH GROGAN, husband and
wife and residents of Kentucky and the only stockholders of Seller ("OWNERS").
Owners and Seller are hereinafter referred to collectively as the "SELLING
PARTIES".
R E C I T A L S:
WHEREAS, Seller is engaged in the business (the "BUSINESS") of
marketing, distributing and selling prepared food products and related products
and services, and
WHEREAS, concurrently herewith, (i) Purchaser, ABEV and Grogan's Farms,
Inc., a Kentucky corporation ("GFI") and Owners, as the sole shareholders of
GFI, have executed that certain Agreement and Plan of Reorganization (the
"MERGER AGREEMENT") pursuant to which GFI will be merged with and into Purchaser
in a transaction intended to qualify as a "reorganization" within the meaning of
Section 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the
"CODE") and (ii) Purchaser and Sellers entered into that certain Real Estate
Purchase Agreement (the "RPA") pursuant to which Sellers will sell the real
estate described in the RPA. Seller and GFI are hereinafter sometimes referred
to together as the "COMPANIES". Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in the Merger Agreement; and
WHEREAS, Purchaser desires to acquire, and Seller desires to sell, the
"ASSETS" (as described on SCHEDULE A, attached hereto), and which, for purposes
hereof, shall include the "INTANGIBLES" (as defined in Section 5H hereof) for a
purchase price which is established herein, all upon the terms and conditions
hereinafter set forth.
NOW, THEREFORE, and in consideration of the mutual premises and
representations, warranties and covenants and other good and valuable
consideration, the receipt and sufficiency of which being acknowledged, the
parties agree as follows:
<PAGE>
l. SALE AND PURCHASE. On the Closing Date (as defined in Section 4
hereof), in reliance on the representations, warranties, covenants and
agreements of the parties, and on the terms and subject to the conditions set
forth herein, Seller shall sell, convey, transfer, assign and deliver to
Purchaser, the Assets, free and clear of all Encumbrances (as defined in Section
5B hereof). The Assets shall not include those assets identified on SCHEDULE B,
aftached hereto. Purchaser is not assuming any liability or obligation of Seller
of any nature whatsoever, except as expressly set forth in SCHEDULE C hereto.
Seller shall remain liable and responsible for all obligations and liabilities
not expressly assumed by Purchaser hereunder, and regardless of any agreement
relating to indemnification of the parties pursuant hereto. The transfer of the
Assets shall be effective as of October 1, 1996, at which time Purchaser shall
take control of the Business, and all decisions of any nature in respect thereof
2. PURCHASE PRICE. The purchase price (the "PURCHASE PRICE") for the
Assets shall be an amount equal to TWO HUNDRED THOUSAND AND NO/I00THS DOLLARS
($200,000.00), plus interest on such amount at the rate of seven per cent (7%)
per annum accrued from October 1, 1996 to the Closing Date, payable as set forth
below. The Purchase Price shall be allocated for Federal Income Tax purposes
among the Assets as agreed by the parties within sixty days after the Closing
Date, and each party agrees that, to the extent permitted by law, it or he shall
account for the sale of the Assets in a manner consistent with such allocation.
3. PAYMENT OF PURCHASE PRICE. On the terms and subject to the
conditions herein, Purchaser shall deliver to Seller on the Closing Date, the
Purchase Price, in immediately available funds.
4. CLOSING. The consummation of the transactions contemplated hereby
(the "CLOSING") shall take place no earlier ten (10) days after all conditions
precedent have been satisfied, including the consummation of the transactions
contemplated by Merger Agreement and the RPA, but no later than sixty (60) days
after the date hereof, at 9:00 A.M. (the "CLOSING DATE") at the law offices of
the Selling Parties' counsel in Paducah, Kentucky, or otherwise, on such other
date or place as the parties hereto may mutually agree.
5. THE SELLING PARTIES' REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each of the Selling Parties hereby jointly and severally, with the
other Selling Parties, represents and warrants to, covenants and agrees with,
ABEV and Purchaser, now and as of the Closing Date, as follows:
2
<PAGE>
A. Organization Standing and Power. Seller is a corporation
duly organized, validly existing and in good standing under the laws of
Kentucky. Seller's federal employer identification number, state identification
number for sales and tax purposes and all similar identification numbers are set
forth on EXHIBIT 5A, attached hereto. Seller has all requisite corporate power
and authority to own, lease and operate the Assets owned, leased or operated by
it and to carry on the Business as now being conducted in the manner that, and
in the places in which, the Business is now being conducted. Neither the nature
of the Business nor the ownership, operation or leasing of real estate or
personal property by Seller requires it to qualify as a foreign corporation in
any jurisdiction other than jurisdictions in which the failure to so qualify
would not materially and adversely affect the Business or any of the Assets.
Seller is not qualified to transact business as a foreign corporation in any
state. Seller does not conduct any business or own or lease any asset or
property of any nature outside of the United States. Each of the Selling Parties
have the full power and authority and legal capacity to enter into and deliver
this Agreement and perform all other acts necessary or appropriate to consummate
all of the transactions contemplated hereby. Seller does not now and has never
had any subsidiaries.
B. Capital Structure, Ownership of Assets and Related Matters.
(i) The capital structure of Seller, including the
number of authorized, issued and outstanding shares of capital stock
are listed on PART A OF EXHIBIT 5B(I), attached hereto. Owners own,
both beneficially and of record, all of the issued and outstanding
shares of capital stock, equity or equity equivalents in and to Seller.
Seller has and will have, at Closing, good and marketable title to, or
a valid and transferable leasehold interest in, all of the Assets,
except for such Assets as may be sold or otherwise disposed of between
the date hereof and the Closing Date in the ordinary course of
business. No other "PERSON" (as defined in Section 15M hereof) has any
fee, leasehold or equitable interest in and to the Assets, except as
set forth on PART B OF EXHIBIT 5B(I). Except as set forth on PART B OF
EXHIBIT 5B(I), on the Closing Date, the Assets will be free and clear
of all of the following (hereinafter collectively referred to as
"ENCUMBRANCES"): security interests, liens, pledges, claims, charges,
escrows, encumbrances, options, rights of first refusal, mortgages,
indentures, security agreements or other agreements, arrangements,
contracts, commitments, understandings or obligations, whether written
or oral, encumbering title in any way, other than the Encumbrances
created hereby. None of the Selling Parties has any direct or indirect
financial stake in any Person which has an interest in any assets used
in
3
<PAGE>
conducting the Business, except for Owners' fee interest in the real
property located at Route 2, Arlington, KY 42021.
(ii) Except for this Agreement, there are no
outstanding options, warrants or other rights, contracts, commitments,
agreements, understandings, arrangements or restrictions relating to
the purchase or acquisition of any shares of capital stock or other
equity securities or interests of any nature of Seller.
(iii) Seller neither owns nor has ever owned, shares
of any class of capital stock of any other corporation and does not
have any interest in any other entity and there are no contracts,
commitments, agreements, understandings or arrangements relating to
such.
(iv) Seller has never assumed or succeeded to the
liabilities of any Person (except each other), whether by operation of
law or otherwise, and it has never been known by any other name or
done business under any other name. THE BUSINESS CONSISTS ONLY OF THE
PURCHASE OF FINISHED GOODS FROM GROGAN'S SAUSAGE, INC. AND THE SALE OF
PRODUCTS TO UNAFFILIATED THIRD PARTIES.
(v) Except for sales of inventory in the ordinary
course of business, and the rights of ABEV and Purchaser hereunder,
there are no outstanding options, warrants or rights to purchase or
acquire any interest whatsoever in any of the Assets, and there are no
contracts, commitments, agreements, understandings, arrangements or
restrictions relating to the ownership or operation of any of the
Assets.
(vi) The Assets constitute all of the property
necessary for the conduct of the Business in the manner in which and
to the extent to which it is currently being conducted. To Owners
knowledge, there is no fact, event or action which could result in an
adverse change in the Business, prospects, financial condition or
results of operations or the operation or ownership of the Assets by
Purchaser following the Closing.
(vii) The Assets owned or leased by Seller on the
date hereof constitute, and will constitute at Closing, all of the
properties and assets used in the conduct of the Business on the date
hereof, are in good working condition, have been maintained in
accordance with industry standards, and are sufficient to conduct the
Business in a manner consistent with past practices. The Selling
Parties know of no
4
<PAGE>
condition which, either alone or with other conditions, interferes with
the economic value of any of the Assets or the use thereof in the
manner used by Seller in the Business.
(viii) The Assets do not include any interest of any
nature in any parcel of real property, except for the leases described
on EXHIBIT 5B(VIII) (collectively, the "REAL ESTATE").
C. Authorization. This Agreement and all writings relating
hereto to be executed and delivered by each of the Selling Parties have been
duly authorized by all necessary action and constitute the valid and binding
obligations of each the Selling Parties, enforceable in accordance with their
respective terms. The individuals executing this Agreement and the other
documents executed in connection herewith, individually and on behalf of Seller,
have been duly authorized and have the legal capacity to execute all of such
documents in such capacities. Neither the execution and delivery hereof nor any
writing relating hereto nor the consummation by any of the Selling Parties of
the transactions contemplated hereby or thereby, nor compliance with any of the
provisions hereof or thereof, will: (i) conflict with or result in a breach of
Seller's Articles or Certificate of Incorporation or By-Laws; (ii) violate any
statute, law, rule or regulation or any order, writ, injunction or decree of any
court or governmental authority; (iii) violate or conflict with or constitute a
default under (or give rise to any right of termination, modification,
cancellation or acceleration under), any agreement or writing of any nature to
which any of the Selling Parties is a party or by which the Assets may be bound
or affected, or result in the creation of any Encumbrance against or upon any of
the Assets under any agreement or writing to which any of the Selling Parties is
a party or by which any of them or their assets may be bound or affected, or
(iv) impair or in any way limit any governmental or official license, approval,
permit or authorization of Seller. Other than as set forth on EXHIBIT 5C,
attached hereto, no consent or approval of or notification to any Person is
necessary or required in connection with the execution and delivery by any of
the Selling Parties of this Agreement or any writing relating hereto or the
consummation of the transactions contemplated hereby or thereby.
D. Financial Statements.
(i) EXHIBIT 5D hereto consists of the balance sheets
and the related statements of income, changes in shareholders' equity
and changes in financial position of Seller, and the notes thereto and
the auditor's report thereon, if applicable, as at and for the fiscal
years ended July 31, 1994, 1995 and 1996, and all interim statements
prepared to date for the fiscal year to end September 30, 1996
(collectively and as updated, the "HISTORICAL FINANCIALS").
5
<PAGE>
EXHIBIT 5D shall be updated as interim statements are prepared. The
Historical Financials are true, correct and complete and present fairly
the financial position of Seller and the results of its operations,
retained earnings and changes in financial positions as at the dates
thereof and for the periods covered thereby, do not include or omit to
state any material fact which renders them misleading, and have been
prepared in conformity with generally accepted accounting principles
applied on a consistent basis, except as may be disclosed in the
reports relating thereto. At the Closing, the Selling Parties shall
deliver to ABEV and Purchaser a balance sheet dated as of the end of
the accounting period before the Closing Date (the "CLOSING BALANCE
SHEET") based on the best knowledge and good faith of the Owners, which
shall be prepared on a basis consistent with the Historical Financials
and in accordance with the provisions hereof. The Closing Balance Sheet
shall be certified by all of the Selling Parties as showing the
financial position of Seller as of that date. Seller has taken all
steps necessary to change its fiscal year end to September 30,
commencing with the 12 month period to end September 30, 1996.
(ii) Except as disclosed therein, the statements of
income included in the Historical Financials do not contain any items
of special or nonrecurring income, and the balance sheets included in
the Historical Financials do not, and the Closing Balance Sheet will
not, reflect any write-up or revaluation increasing the book value of
any asset, other than adjustments required by ABEV and Purchaser's
outside auditors in the determination of the Purchase Price, and as
disclosed thereon.
(iii) All pro forma adjustments made by any of the
Selling Parties or on any of the Selling Parties' behalf in any sales
brochure or other document or literature delivered to ABEV and
Purchaser as part of their review of the Business are reasonable,
appropriate and adequate.
E. Liabilities.
(i) The liabilities of Seller on the Historical
Financials consisted, and the liabilities on the Closing Balance Sheet
will consist, solely of obligations and liabilities incurred in the
ordinary and regular course of Business to Persons which are not
affiliated with any of the Selling Parties, except for lease payments
in respect of the Real Estate and payments to GFI for finished goods
inventory.
(ii) As of the Closing, Seller will have no material
and adverse liability or obligation of any nature whatsoever,
including,
6
<PAGE>
without limitation, known or unknown, fixed or contingent, accrued,
absolute, matured or unmatured, or any "LOSS CONTINGENCIES" considered
"PROBABLE" or "REASONABLY POSSIBLE" within the meaning of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 5, which were not or will not be recorded on the
Historical Financials, the Closing Balance Sheet or on EXHIBIT 5E(II)
hereof, it being the intent of the parties that every "material"
liability or obligation of every nature (including those liabilities or
obligations commonly referred to as "off-balance sheet" liabilities) be
properly disclosed to ABEV and Purchaser, and properly accrued on
either the Historical Financials or the Closing Balance Sheet or
disclosed herein, as the case may be. All contingent liabilities either
not disclosed or disclosed on EXHIBIT 5E(II) shall be for the account
of the Selling Parties for purposes of determining indemnification
hereunder, and, if any such liability is paid by ABEV and Purchaser,
then, such payment shall be deemed accrued on the books of the Business
as of September 30, 1996 for the purpose of retroactively adjusting the
Purchase Price. Furthermore, should such undisclosed liability be
deemed a recurring operating expense of the Business, then for
indemnification purposes and otherwise, the Purchase Price shall be
deemed to have been reduced Four Dollars ($4.00) for every dollar of
such operating expense, to be paid in cash from Sellers to Purchaser.
(iii) All reserves and allowances included or to be
included in the Historical Financials and the Closing Balance Sheet
are, and will be, adequate, appropriate and reasonable (in accordance
with generally accepted accounting principles), as may be required by
ABEV and Purchaser's outside auditors.
(iv) EXHIBIT 5E(IV) is a complete list (the
"PAYABLES' LIST"), as sworn to by the Selling Parties, of every
creditor of Seller, including taxing authorities (whether the liability
to such creditor is accrued, absolute, contingent or otherwise), listed
by name, address, amount of liability to such creditor, and whether
such liability is disputed. The Payables' List shall be updated as of
the Closing Date.
F. Absence of Changes. Except as otherwise listed on EXHIBIT
5F hereto or as expressly permitted to satisfy the conditions precedent herein,
the Business has been operated only in the ordinary and regular course and there
has not been, since June 30, 1996 and through the Closing Date there will not
be, with respect to Seller: (i) any material and adverse change in its
condition, financial or otherwise; (ii) any material and adverse damage,
destruction or loss, whether or not covered by insurance; (iii) other than for
purchases of inventory in the ordinary course of business, the incurring of any
obligation or liability of any nature (whether absolute,
7
<PAGE>
accrued, contingent or otherwise and whether due or to become due) in excess of
$10,000.00; (iv) any transfer or application of any assets of Seller to the
payment of any amount payable to or for its benefit or any of the following
Persons ("SELLING PARTIES' AFFILIATES"): any member of the family of Owners or
any Person which is controlled, directly or indirectly, by either Owner or by
any member of the family of either Owner; (v) any declaration, setting aside or
payment of any dividend or other distribution in respect of any shares of
capital stock of Seller, or any direct or indirect redemption, purchase or other
acquisition of any such stock; (vi) any organized labor negotiations, strike or
work stoppage affecting the Business or any threat of the foregoing; (vii) any
sale, transfer or other disposition of any tangible or intangible asset of
Seller to any Person (except for (a) payments of third party obligations
incurred in the ordinary and regular course of business, in accordance with the
regular payment practice of Seller, and (b) sales of inventory in the ordinary
and regular course of business); (viii) any termination or waiver of any rights
of material value to the Business; (ix) the adoption of any statute, rule,
regulation or order which materially and adversely affects the Business; (x) any
increase in the compensation of, or benefits for, officers, employees,
independent contractors or other Persons performing services for Seller
(including, without limitation, any increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment), having annual remuneration in
excess of $40,000, except for increases in accordance with Seller's normal
salary administration policies; (xi) any capital expenditure or commitment in
excess of $20,000.00 for property, plant or equipment; (xii) any forward
purchase commitments not completed by the Closing Date involving more than
$20,000.00; (xiii) any material change in the accounting methods or practices
followed by Seller or any change in depreciation or amortization policies or
rates theretofore adopted; (xiv) any payment of any liability or obligation of
Seller in excess of $5,000.00 sooner than in accordance with its usual or
customary practices; (xv) any sale of goods or services to any customer where
the payment for such goods or services allows for the payment therefor more than
fifteen (15) days after the goods or services have been provided to such
customer; or (xvi) any commitment, obligation or understanding to do any of the
foregoing.
G. Tax Matters. Seller has filed, and will timely file, all
tax returns and reports required to be filed and, in respect of any period
ending prior to or which includes the Closing Date, has paid, or has set up an
adequate reserve for the payment of, all taxes required to be paid or
anticipated to be payable, which reserve either is reflected in the Historical
Financials or will be reflected in the Closing Balance Sheet, as the case may
be. All tax returns of Seller for the last five (5) years have been delivered to
ABEV and Purchaser, and there have been no audits of such returns. Seller has no
liability for any taxes in excess of the amounts so paid or reserves so
established. Seller has properly withheld and paid, and will properly
8
<PAGE>
withhold and pay, all payroll or similar taxes. Seller is not delinquent in the
payment of any tax, assessment, penalties or interest and it has not requested
any extension of time within which to file any tax returns in respect of any
fiscal year which have not since been filed. All tax returns filed or to be
filed are, or will be, true, complete and correct. There are no tax liens on any
of the Assets. No deficiencies for any tax, assessment, penalties or interest
have been proposed, asserted, assessed or, to the knowledge of Owners,
threatened against Seller which would not be covered by existing reserves and,
as of the date hereof, no requests for waiver of the time to assess any such tax
are pending. Seller is not currently involved in an audit and, to the knowledge
of Owners, none are threatened. None of the Selling Parties have given or been
requested to give waivers of any statute of limitations relating to the
assessment or payment of any taxes for any taxable period. As of the Closing
Date, all taxes collected under color of law will have been remitted to the
proper taxing jurisdiction. For purposes hereof, the term "TAX" shall include
all Federal, state, local and foreign taxes, assessments, and all franchise,
sales, use, occupation, property, excise or other taxes of any nature
whatsoever, and governmental charges, including penalties and interest relating
to the foregoing. Seller does not have, and will not have, any obligation of any
nature to indemnify either Owner for tax liabilities owing due to the
intentional acts of either Owner.
H. Property Owned, Leased or Licensed.
(i) PART A OF EXHIBIT 5H(I) contains a list of all
real estate leased by Seller (collectively, the "REAL ESTATE") and the
termination date or notice requirement with respect to termination,
annual rental and renewal or purchase options). Seller does not own any
fee interest in any real property and has no understandings, agreements
or commitments to purchase any.
(a) True and complete copies of all leases
relating to the Real Estate have been delivered to ABEV and Purchaser.
The Selling Parties know of no interior or exterior structural defects
or other defects in the buildings or improvements thereto or in the
plumbing, electrical, mechanical, heating, ventilating,
air-conditioning, sprinkler or other systems thereof. To the knowledge
of Owners, PART B OF EXHIBIT 5H(I), or the environmental assessment or
an update thereof to be delivered, at Owners' cost, to ABEV and
Purchaser (along with the update, the "ENVIRONMENTAL Report") with
respect to the Real Estate, sets forth the location of all underground
or below grade storage tanks, pumps, piping, dispensers, or any
retention pits located on any part of the Real Estate, and a list of
all documents, notices, test reports or other information relating
thereto including a description of substances stored therein. In
9
<PAGE>
addition, at the Closing, each of the Selling Parties will deliver a
Certificate (the "ENVIRONMENTAL CERTIFICATE") which details all known
or suspected environmental concerns with respect to the Real Estate
and the operation of the Business not expressly detailed in the
Environmental Report or on PART B OF EXHIBIT 5H(I). The Environmental
Certificate shall also detail the sources of information utilized by
the Selling Parties therein.
(b) With respect to the Real Estate: the
lessor has good and indefeasible title in fee simple thereto and owns
all buildings and other structures (excluding equipment and other
fixtures which are owned by Seller) thereon; there are no unrecorded
leases, Encumbrances, restrictions or other matters materially
affecting title or the current use thereof and no Person (other than
the lessor) has the right to impose or claim any interest whatsoever
thereon, and, there are no covenants, conditions, restrictions or
other title exceptions applicable thereto which are presently violated
or which adversely affect the marketability thereof and there are no
defects therein or thereon.
(c) To Owners' knowledge, the Real Estate is
not subject to or threatened with any requests, applications or
proceedings to condemn, rezone or demolish all or any portion thereof.
Seller has have obtained all permits and certificates necessary for
the use and occupancy thereof and the improvements thereon and such
use and occupancy is and has been in full compliance with all federal,
state and local laws, rules and regulations. To the knowledge of
Owners: (i) all water, sewer, gas, electric, telephone, drainage and
other utility equipment, air conditioning, heating, ventilation and
all other facilities and services (collectively, the "SERVICES")
required by law or necessary for the operation of the Real Estate as
it is now being operated are installed and connected pursuant to valid
permits, are adequate to service such Real Estate, and are in good
operating condition and repair, and (ii) no material fact or condition
exists which would result in the termination or impairment in the
furnishing of any Service.
(d) None of the Selling Parties have
received notice of and have no awareness of any currently due, pending
or threatened general or special assessments, taxes, litigation or
governmental proceedings against or affecting or which may affect the
Real Estate. The most recent taxes and assessments with respect to the
Real Estate are set forth in PART C OF EXHIBIT 5H(I).
10
<PAGE>
(e) To Owners' knowledge: each parcel of
Real Estate consists of one contiguous parcel, abuts on and has direct
vehicular access to a dedicated thoroughfare, and none of the Real
Estate is in an area designated as being subject to flood hazards or
risks.
(g) With respect to the leases covering the
Real Estate, such leases are in full force and effect, are valid and
binding obligations of the parties thereto, have not been amended and
are enforceable against the parties thereto in accordance with the
terms thereof. There are no defaults (alleged or actual) by either
party to such leases and no event has occurred which with due notice
or lapse of time or both would constitute a default. None of the
Selling Parties has any obligation to pay brokerage commissions or
other compensation in connection with such leases.
(ii) EXHIBIT 5H(II) contains a list of each item of
machinery, equipment, tooling, office furniture, automobiles, trucks
and other fixed assets owned or leased by Seller (collectively, the
"M&E") and all locations thereof EXHIBIT 5H(II) also contains a list
and brief description of each lease or other agreement under which
Seller pays in excess of $5,000.00 annually to lease, license, hold or
operate any of the M&E. Copies of all leases relating to any item of
M&E have been delivered to ABEV and Purchaser. The M&E will,
individually or in the aggregate, be fit for such assets' intended use
as of the Closing Date.
(iii) None of the Selling Parties has any right,
title or interest in and to any (a) nongovernmental licenses,
franchises, distribution or other similar rights, or (b) trademarks,
trade names (except for Seller's corporate name and trade name and
recipes), service marks, copyrights, know-how, software, written,
magnetic and storage media, inventions, designs, models, processes,
patents or any other proprietary rights and applications for any of the
foregoing. With respect to Seller's trade name and recipes, none of the
Selling Parties pays any royalty with respect to any of them, has the
exclusive right to bring actions for the infringement thereof and has
not granted any rights of any nature in any of them to any Person. No
product made or sold by Seller or for its benefit violates any license,
franchise or distribution agreement or infringes any trademark, trade
name, service mark, copyright, know-how, trade secret or patent of
another Person.
I. Insurance. Seller has maintained and presently maintains in
effect insurance covering the Assets and the Business from
11
<PAGE>
reasonably foreseeable losses and any liabilities or risks relating thereto and
such insurance coverage shall be maintained by Seller through the Closing Date.
EXHIBIT 5I hereto sets forth a complete and accurate schedule (including the
type of policy, the policy number, the limits of coverage, the carrier, the
insurance agent or broker and the expiration date) of all insurance policies,
letters of credit or performance bonds held or issued by or on behalf of Seller
and now in force and those contemplated (including, without limitation,
comprehensive general liability, personal liability, comprehensive general
casualty and extended coverage, automobile, machinery, fire and lightning,
title, endowment, life, workers' compensation and fidelity bond coverage)
(collectively, the "INSURANCE POLICIES") and insurance agents and/or brokers
providing such insurance coverage. Except as disclosed on EXHIBIT 5I, such
coverage frilly complies with all contractual requirements of the Business and
Seller has not forfeited or waived any claim under any Insurance Policies and
each has fully complied with the terms and conditions thereof. The products
liability, personal injury and property damage insurance maintained has been on
an "OCCURRENCE" basis during the five-year period prior to the Closing Date.
EXHIBIT 5K (sets forth all property damage or personal injury claims asserted
against Seller during the past three years, or otherwise still pending. Except
as otherwise set forth on EXHIBIT 5K, all of such claims have been and are being
defended by insurance carriers or indemnitors without reservation and are or
will be completely covered by the Insurance Policies. None of the Selling
Parties has received notification, either directly or indirectly, from any
insurance carrier, denying or disputing any claim made by Seller, denying or
disputing any coverage for any such claim, denying or disputing the amount of
any claim, or regarding the possible termination, cancellation or amendment of
or premium increase with respect to any Insurance Policies. Seller has no
pending or anticipated claim against any of the insurance carriers under any of
such policies and there has been no, to the knowledge of Owners, actual or
alleged, occurrence of any kind which may give rise to any such claim.
J. Agreements, Etc. EXHIBIT 5J contains a list of all written,
and brief description of all oral, contracts, agreements, leases,
understandings, commitments, licenses, letters of credit, instruments and
obligations, the open purchase and sales orders journals, if any, as of the
beginning of business on the date hereof (which journals shall be updated as of
the Closing Date), and other instruments and obligations not listed on another
Exhibit or schedule hereto (unless excluded therefrom due to the dollar amount
involved) affecting the Business in any manner whatsoever (collectively, the
"CONTRACTS"). With respect to the Contracts, except as otherwise set forth on
such EXHIBIT 5J: (i) all are in full force and effect, have not been modified or
amended, and constitute legal, valid and binding obligations of the respective
parties thereto, (ii) Seller has, in all material respects, performed all of the
obligations required to be performed by it to
12
<PAGE>
date and is not in default or, to the Owners' knowledge, alleged, to be in
default in any respect thereunder, no party has been released from any
obligation thereto and there exists no event, condition or occurrence which,
with or without notice, lapse of time or the occurrence of any other event,
would constitute a default thereunder by Seller or, to Owners' knowledge, would
constitute a default on the part of any other party thereto, (iii) the
continuation, validity and effectiveness under the current terms thereof
(including the current rentals under any leases or licenses) will in no way be
affected by the transactions contemplated hereby, or, if any would be affected
without a consent or waiver, the Selling Parties shall cause an appropriate
consent or waiver respecting such transfer to be delivered to ABEV and Purchaser
prior to the Closing Date at no cost or other adverse consequences to Seller,
ABEV or Purchaser; and (iv) none require the payment or performance of material
considerations by Seller on or after the Closing Date without the receipt of
consideration of commensurate value, within the meaning of applicable fraudulent
conveyance laws or decisions. The Selling Parties have furnished to ABEV and
Purchaser complete copies of all written Contracts and complete written
summaries of all oral Contracts described on any Exhibit hereto. Seller is not
restricted by any agreement to which it is a party from carrying on the Business
anywhere in the world. The Contracts confer on Seller all rights necessary to
enable it to conduct the Business as now being conducted (as well as any
expansion thereof now contemplated) and none imposes upon it any unduly or
extraordinary burdensome obligation.
K. Litigation and Claims, Etc. Except as set forth on EXHIBIT
5K, there are no personal injury, product liability or other actions, suits,
claims, investigations or legal or administrative or arbitration proceedings of
any nature pending or, to the knowledge of Owners, threatened, against or
involving any of the Selling Parties, the Assets, the Business or products,
whether at law or in equity, or before or by any foreign, federal, state,
municipal or other governmental or quasi-governmental instrumentality. Attached
to EXHIBIT 5K are (i) all service bulletins or similar notices to customers,
vendors or the public at-large and other Persons which discusses or notifies
such Persons about problems with Seller's products, and (ii) all notes from all
technical or engineering meetings (or the like) which relate in any way to
problems or potential problems of any nature with respect to such products. To
the knowledge of Owners, there is no basis for any other such action, suit,
claim, investigation or proceeding, and except as set forth on EXHIBIT 5K, none
of the foregoing has been pending during the last three years. There are no
outstanding orders, decrees or stipulations issued by any foreign, local, state
or federal judicial or governmental or quasi- governmental authority to which
any of the Selling Parties is or was a party or by which any is or was bound.
The insurance coverages in the Insurance Policies are adequate in character and
amount to pay all liabilities
13
<PAGE>
relating to the matters described in EXHIBIT 5K. EXHIBIT 5K also details all
"recalls" or similar measures or public notices which occurred on or after
January 1, 1995, and details Seller's system for handling claims, whether under
warranties or otherwise, and also lists all such claims made in the last three
years.
L. Compliance; Governmental Authorizations; OSHA.
(i) Seller is in compliance, in all material
respects, with all federal, state and local laws, ordinances,
regulations, permits, licenses, decrees, judgments and orders
applicable to the Business, and has all foreign and United States,
federal, state and local governmental licenses and permits necessary
for the conduct of the Business as presently conducted or contemplated;
such licenses and permits are legally valid and in full force and
effect; no violations are or have been recorded in respect of any
thereof; and no proceeding is pending or, to the knowledge of Owners,
threatened, to revoke or limit any thereof. EXHIBIT 5L contains a list
and description (including subject matter and termination information)
of: (a) all such governmental licenses and permits (none of which will
be affected by the transactions contemplated hereby, unless otherwise
indicated on said Exhibit); and, (b) all consents, orders, decrees and
other compliance agreements under which Seller is operating or bound,
copies of all of which have been furnished to ABEV and Purchaser.
(ii) The Selling Parties have furnished to ABEV and
Purchaser copies of all written reports in their control or possession
of inspections relating to the Business and properties from January 1,
1994 through the date hereof under the Occupational Safety and Health
Administration Act, as amended, or comparable state legislation and all
other applicable foreign and United States federal, state and local
health and safety laws and regulations or any other law, rule or
regulation that either Seller or the Business is subject. To the
knowledge of Owners, there have been no other similar inspections. The
deficiencies, if any, noted on such reports or any deficiencies noted
by inspection through the Closing Date have been corrected, or will be
corrected by the Closing. To the knowledge of Owners, there is no other
safety, health, environmental or other material problem or concern
relating to the Business.
M. Inventories. The inventories of Seller included on the
Historical Financials and to be included on the Closing Balance Sheet consist
only of finished goods and are and will be valued at the lower of cost or market
value, net of reserves. Such inventories are all usable in the ordinary and
regular course of the Business, and are fit and sufficient for the purpose
14
<PAGE>
for which they were purchased. All excess and obsolete items have been written
down to net realizable value, or written off, and all obsolete, damaged or
spoiled items have been destroyed. The inventories which were in transit on the
date hereof, and the inventories which are in transit on the Closing Date do not
and will not include any items which are damaged, spoiled or below standard
quality (except items for which Seller will receive credit or replacement from
the manufacturer or shipper thereof). Seller has exercised, and through the
Closing Date will exercise, its best efforts to have, the proper amount of
inventories to conduct the Business consistent with past practices. All
inventories are located at either the Real Estate or are on trucks being
delivered to the Companies' customers. Seller's inventories do not have any
allocation of overhead except as specifically disclosed on EXHIBIT 5M. Except as
specifically disclosed on EXHIBIT 5M, the inventory consists of items of quality
and quantity usable in the normal course of the Business. The Selling Parties
will provide to ABEV and Purchaser a list of all inventory (the "INVENTORY
LIST") on hand as of the end of the monthly accounting period ending closest to
the Closing Date, which list will comply with all of the requirements contained
in Sections 5D and 5M hereof.
N. Employee Matters. Seller has generally enjoyed a good
employer-employee relationship with their respective employees. Seller has
accrued on the Historical Financials, and will accrue, adequate reserves on the
Closing Balance Sheet, for all wages, salaries, contractual bonuses, vacation
pay and other direct and indirect compensation earned by, or accrued for the
benefit of, all employees (whether or not vested or payable by such date). The
Closing Balance Sheet will also include accruals for year end contractual
bonuses, pension and profit sharing contributions, and any other adjustments
which might normally be made only at year end. Upon termination of the
employment of any employee of Seller, none of it, ABEV or Purchaser will incur
any liability for any severance or termination pay, pension or profit-sharing
benefit or other similar payment under Seller's practices or policies in effect
on or prior to the Closing Date. Except as set forth on EXHIBIT 5K, there are no
controversies pending or, to the knowledge of Owners, threatened by any of
Seller's employees, former employees, job applicants or any association, group
or other Person or Persons regarding any of the Selling Parties' employment
practices or policies.
Seller is not a party to or bound by any employment or consulting
agreement, any collective bargaining agreement or any other agreement with a
labor union. There is not pending or, to the knowledge of Owners, threatened any
labor dispute, strike or work stoppage (whether by their own employees or
another Person's employees) which may affect the Business or which may interfere
with its continued operation. Seller has complied with all laws, rules and
regulations in connection with all employment matters, including without
limitation, hiring and firing of employees, wage matters,
15
<PAGE>
collective bargaining matters, and matters relating to the National Labor
Relations Act and the Workers Adjustment and Retraining Notification Act, and to
Owners' knowledge, there are no activities or proceedings of any labor union to
organize any employees thereof. During the twelve-month period preceding the
date hereof, there have not been any significant labor troubles involving
employees of Seller and there are no significant threats of work stoppages by
such employees.
EXHIBIT 5N contains a list of all directors, officers, managers,
employees, consultants, independent contractors and other Persons rendering any
service to Seller who, during the 1996 fiscal year, are expected to receive
remuneration in excess of $25,000, together with the current job title and
aggregate remuneration rate (bonus and salary) for each such person, as well as
the total remuneration paid to date and expected amount of remuneration in 1996.
Other than Owners, there are no Persons who receive an aggregate of $25,000 or
more from both Seller and GFI.
O. EMPLOYEE BENEFIT PLANS.
(i) Except as is described in EXHIBIT 5O(I), neither
any of the Selling Parties nor any current or former Plan Affiliate of
any of the Selling Parties has at any time had any liability with
respect to any of the following (whether written, unwritten or
terminated): (a) any "employee welfare benefit plan," as defined in
Section 3(1) of ERISA, (b) any "employee pension benefit plan," as
defined in Section 3(2) of ERISA, or (c) any other plan, policy,
program, arrangement or agreement providing employee benefits (or other
similar benefits) to former employees, dependents, beneficiaries,
directors or independent contractors, including, but not limited to,
any bonus or incentive plan, stock option, restricted stock, stock
bonus plan, salary reduction agreement, change-of-control agreement,
severance agreement, material fringe benefit program, short-term
disability plan or sick leave, personnel policy, vacation time, holiday
pay, moving expense reimbursement program, employment agreement or
consulting agreement which could result in ABEV or Purchaser having any
liability, whether direct or indirect.
(ii) As used herein, the following terms shall have
the following respective meanings: (a) the term "EMPLOYEE PLAN" shall
mean any plan, policy, program, arrangement or agreement described in
Section 5O(i), whether or not scheduled; and (b) the term "ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as amended.
16
<PAGE>
(iii) With respect to any person or entity ("FIRST
PERSON"), the term "PLAN AFFILIATE" shall mean any other person or
entity with whom the First Person constitutes all or part of a
controlled group, or which would be treated with the First Person as
under common control or whose employees would be treated as employed by
the First Person, under Section 414 of the Code and any regulations,
administrative rulings and case law interpreting the foregoing.
(iv) No Employee Plan (a) is subject to Title IV of
ERISA, (b) is a "multiemployer plan" as defined in Section 4001 of
ERISA, a "multiemployer plan" within the meaning of Section 3(37) of
ERISA, a "multiple employer plan" within the meaning of Code Section
413(c) or a "multiple employer welfare arrangement" within the meaning
of Section 3(40) of ERISA, or (c) provides any welfare-type benefits
for retirees or former employees, or their spouses or dependents
(except for limited continued medical benefit coverage for former
employees, their spouses and other dependents as required to be
provided under Section 4980B of the Code.
(v) A complete copy of each written Employee Plan as
amended to the Closing, together with Form 5500 Annual Reports for the
three (3) most recent plan years, if any; a copy of any funding vehicle
with respect to each such plan; a copy of the most recent determination
letter with respect to such plan (if any); have been delivered to ABEV
and Purchaser. A description of the material terms of any unwritten
Employee Plan is set forth in EXHIBIT 5O(v). No person has made any
statement, whether oral or in writing, regarding any Employee Plan
which will result in any liability to ABEV or Purchaser in excess of
any liability previously disclosed pursuant to this paragraph.
(vi) Each Employee Plan (a) has been and currently
complies in form and in operation in all respects with all applicable
requirements of ERISA and the Code and any other applicable Federal and
state laws, (b) has been and is operated and administered in compliance
with its terms (except as otherwise required by law); (c) has been and
is operated in compliance with the applicable requirements of the Code
and ERISA in such a manner as to qualify, where appropriate, for both
Federal and state purposes, for income tax exclusions to its
participants, tax-exempt income for its funding vehicle, and the
allowance of deductions and credits with respect to contributions
thereto; and (d) where applicable, has received a favorable
determination letter from the Internal Revenue Service.
17
<PAGE>
(vii) With respect to each Employee Plan, no person
has: (a) has entered into any nonexempt "prohibited transaction," as
such terms is defined in ERISA or the Code; or (b) has breached a
fiduciary obligation; which could subject ABEV or Purchaser to any
liability.
(viii) With respect to each Employee Plan all
required or recommended contributions, payments, premiums,
contributions, reimbursements, expenses, accruals or other liabilities
for all periods ending prior to or as of June 30, 1996 (including
periods from the first day of the then current plan year to such date)
(a) have been frilly satisfied, (b) will be accrued as of such date, or
(c) are subject to a funding arrangement separate from the assets of
Seller or any of its Plan Affiliates.
P. Transactions with Related Parties. EXHIBIT 5P lists all
amounts directly or indirectly paid (or deemed for accounting purposes to have
been paid) or to be paid by any of the Selling Parties, to, or received by any
of the Selling Parties from any Person which is controlled by, controls, or
under common control with, directly or indirectly, any of the Selling Parties
during the current and the last fiscal year for products or services (including
any charge for management, interest, capital employed, administrative,
purchasing, financial or other services) related in any way to the Business. For
purposes of this Section, the term "SELLING PARTIES" shall include any and all
of the "SELLING PARTIES' AFFILIATES."
Q. Accounts and Notes Receivable. EXHIBIT 5Q contains an aged
list of unpaid accounts and notes receivable (the "RECEIVABLES") owing to Seller
as of a date not more than four (4) business days prior to the date hereof, with
the address of the Business' trade debtors. ABEV and Purchaser shall be
furnished with an updated schedule of Receivables and any other information
relating thereto as ABEV and Purchaser shall reasonably request on reasonable
advance notice. All of the Receivables reflected on the Historical Financials
and to be reflected on updated Receivables Schedules and the Closing Balance
Sheet constituted and will constitute only valid claims against third parties
not affiliated with any of the Selling Parties. The schedule of Receivables also
highlights trade debtors of Seller with principal places of business outside of
the continental United States. The Receivables arose or will arise from bona
fide transactions in the ordinary and regular course of Business and all
(subject to the reserve for bad debt) are collectible within thirty (30) days
after they arose or will arise (except with respect to the Receivables due and
owing from Wal-Mart and Kroger, which Receivables are collectible within sixty
(60) days after they arose or will arise), and are not subject to any defenses,
set-offs or counterclaims. The Historical Financials do, and the Closing Balance
Sheet will, include reserves for bad debt reasonably based on past customer
performance. Except as
18
<PAGE>
listed on EXHIBIT 5Q, Seller does not sell, and does not
contemplate selling, products directly to the United States of America or any
branch, agency or subdivision thereof. EXHIBIT 5Q also highlights those
customers of the Business whose accounts have been more than thirty (30) days
past due repeatedly over the past six (6) months.
R. Customers and Suppliers. EXHIBIT 5R is a list of the ten
(10) largest customers (measured by U.S. dollar volume in each case) of the
Business during the 1995 and 1996 (to date) fiscal years and the last twelve
(12) months showing, with respect to each, the name, address and dollar volume
involved. Seller is not required to provide any bonding, guaranty or other
financial security arrangements in connection with any transactions with any of
their customers, except as described on EXHIBIT SR. Owners have no knowledge or
reason to believe that as a result of the transactions contemplated hereby or
otherwise, any customer listed on EXHIBIT SR intends to cease or substantially
reduce, the purchase of goods or services from ABEV and Purchaser on terms and
conditions similar to those imposed on purchases from Seller prior to the date
hereof. The Selling Parties do not know of any claims or disputes pending,
contemplated or threatened with respect to any of the parties referred to in
EXHIBIT 5R and none are concerned about the financial viability of any of such
parties. Seller's sole and exclusive supplier of inventory is GFI.
S. Miscellaneous Assets. The Assets do not and will not
include (i) any contracts for future services or prepaid items or deferred
charges, the substantial value or benefit of which will not be usable by ABEV
and Purchaser after the Closing Date, and (ii) any goodwill, organization
expense or other intangible asset.
T. Bank Accounts; Officers; Directors; Credit Cards. EXHIBIT
5T is a list of all bank accounts, safe deposit and post office boxes and the
like in the name of or controlled by any of the Selling Parties with respect to
the Business and details about the Persons having access thereto. EXHIBIT 5T
also lists all officers, directors and managers of Seller and all credit or
debit cards under which it has or may have current or future liability and the
names of the Persons holding such cards.
U. Business Generally. Other than for events effecting the
economy or Seller's industry in general, since January 1, 1996, to the knowledge
of Owners, there have been no events, transactions or information affecting or
relating to Seller or the Business which could be reasonably expected to have a
material and adverse effect on the Business.
V. Reports and Studies. EXHIBIT 5V lists all reports and
studies relating to the Business or the sale thereof in the possession or
19
<PAGE>
control of any of the Selling Parties prepared for the officers, directors,
management, stockholders and agents of the Selling Parties since January 1, 1995
by investment bankers, investment advisors, accountants, engineers,
environmental consultants, management consultants or any other Persons.
W. Environmental Matters.
(i) None of the Selling Parties has transported,
stored, treated or disposed, and none has allowed or arranged for any
other Person to transport, store, treat or dispose waste to or at: (a)
any location other than a site lawfully permitted to receive such waste
for such purposes or (b) any location designated for remedial action
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation
and Recovery Act, as amended ("RCRA"), or any similar federal, state or
local statute; and none has performed, arranged for or allowed by any
method or procedure such transportation or disposal in contravention of
any laws or regulations or in any other manner which may result in
liability for contamination of the environment. None of the Selling
Parties has disposed, and none has allowed or arranged for any other
Person to dispose, of waste upon property owned or leased by any of
them.
(ii) (a) No generation, use, handling, storage,
treatment, Release (as defined below), discharge, spillage or disposal
of any Hazardous Waste, Hazardous Substance or Hazardous Chemical (as
defined below) has occurred or is occurring at any site or Facility (as
defined below) at any time owned, leased or operated, directly or
indirectly, by any of the Selling Parties, (b) no Hazardous Waste or
waste containing any Hazardous Substance or Hazardous Chemical
generated, used, handled, stored or treated by Seller has been stored,
Released, discharged, spilled or disposed of at any site or Facility at
any time owned, leased or operated, directly or indirectly, by any of
the Selling Parties, and (c) no site or Facility, at any time, owned,
leased or operated, directly or indirectly, by any of the Selling
Parties is or has been the site of any industrial facility, dump or
landfill.
(iii) No soil or water in, upon, under or adjacent to
any site or Facility at any time owned, leased, or operated, directly
or indirectly, by any of the Selling Parties has been contaminated by
any Hazardous Waste, Hazardous Substance or Hazardous Chemical and no
such site constitutes a nuisance of any kind or nature.
(iv) None of the Selling Parties has received
notification of any past or present failure by Seller to comply with
any
20
<PAGE>
laws, regulations, permits, franchises, licenses or orders applicable
to it or the Business, which have not been remedied, cured or complied
with. Without limiting the generality of the foregoing, none of the
Selling Parties has received any notification (including requests for
information directed to any) from any governmental or
quasi-governmental agency or Person asserting that Seller is or may be
a "potentially responsible party" for a remedial action at any
Facility, pursuant to the provisions of CERCLA, or any similar federal,
state or local statute assigning responsibility for the costs of
investigating or remediation of Releases of contaminants into the
environment.
(v) For purposes of this Agreement, the terms
"Hazardous Waste", "Hazardous Substance", "Hazardous Chemical",
"pollutant", "contaminant", "Release" and "Facility" include any
"hazardous waste", "hazardous substance", "pollutant", "contaminant"
and "facility", respectively, within the meaning of RCRA, CERCLA, the
Emergency Planning and Community Rights to Know Act of 1986, as
amended, or any other federal, state or local law, rule or regulation
adopted pursuant thereto or otherwise relating to the disposal of
Hazardous Wastes or the cleanup of sites at which Hazardous Substances
have been released or the environment in general.
(vi) EXHIBIT 5W(VI) is a list of (a) locations
(identified by address, owner/operator, type of facility, type of
waste, and period of time the Facility was used) to which Seller has,
during the past three (3) years, transported, or caused to be
transported, or allowed or arranged for any other Person to transport,
any type of waste material, generated by either or its customers, for
storage, treatment, burning, recycling or disposal and (b) storage,
treatment, burning, recycling or disposal activities which either has
undertaken, during the past three (3) years, at locations then or
presently owned or occupied by either together with such other relevant
information concerning such locations as would enable ABEV and
Purchaser to determine whether either has any liability for such
locations and the activities thereon, including, but not limited to,
property address, nature of either's interest in the property, current
owner of the property, nature of the activity conducted at such
location, type and form of waste, estimated volume of waste disposal on
or in ground, and period of time the activity was conducted.
X Brokers and Finders. Except for The March Group, LLC, whose
commission shall be borne entirely by Owners, none of the Selling Parties nor
any officer, director or employee thereof, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and, except as stated above, no broker or
21
<PAGE>
finder has acted directly or indirectly for any of the Selling Parties in
connection with this Agreement and the transactions contemplated hereby.
Y. Material Disclosures. No representation, warranty, covenant
or agreement by the Selling Parties contained herein, and no statement contained
in any certificate, Schedule, Exhibit, list or other writing furnished to ABEV
and Purchaser in connection with the transactions contemplated hereby, contains
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading. All Schedules and Exhibits hereto and all writings furnished to ABEV
and Purchaser hereunder or in connection with the transactions contemplated
hereby are accurate, true and complete. All representations, warranties,
covenants and agreements made by the Selling Parties herein and all other
agreements and instruments delivered in connection herewith or pursuant hereto
and facts and information contained in the Exhibits and Schedules shall be true
and correct as of the Closing Date with the same effect as if they had been made
at and as of the Closing Date. There are no facts, conditions, or aspects
relating to the past or present operations of Seller and the Business which are
not set forth herein which would have a material adverse affect upon the
operation of the Business after the Closing Date or ABEV and Purchaser's
investment decision in consummating the transactions contemplated hereby, and
none of the Selling Parties know of any fact, event or action which could result
in a material adverse change in the Business, prospects, financial condition or
results of operations of Seller and the Business or the operation or ownership
of the Assets by ABEV and Purchaser following the Closing. The records of Seller
relating to the Business are accurate and complete in all material respects and
there are no matters as to which appropriate entries have not been made in such
records.
6. ABEV AND PURCHASER'S REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS. Each of ABEV and Purchaser hereby jointly and severally, represents
and warrants to, covenants and agrees with, the Selling Parties, now and as of
the Closing Date, as follows:
A. Organization, Standing and Power. Each of ABEV and
Purchaser is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each has all requisite power and
authority to own, lease and operate the Assets and to carry on the Business
after the transactions contemplated hereby. Each of ABEV and Purchaser has the
full power and authority to enter into this Agreement and perform all acts
necessary or appropriate to consummate all of the transactions contemplated
hereby.
22
<PAGE>
B. Authorization. This Agreement and all writings relating
hereto to be executed and delivered by ABEV and Purchaser have been duly
authorized by all necessary action and constitute the valid and binding
obligations of ABEV and Purchaser, enforceable in accordance with their
respective terms. The individuals executing this Agreement and the other
documents executed in connection herewith on behalf of ABEV and Purchaser have
been duly authorized to execute all of such documents on behalf thereof. Neither
the execution and delivery hereof nor any writing relating hereto nor the
consummation by ABEV and Purchaser of the transactions contemplated hereby or
thereby, nor compliance with any of the provisions hereof or thereof, will: (i)
conflict with or result in a material breach of the Certificates of
Incorporation or By-Laws of ABEV and Purchaser; (ii) violate any statute, law,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority; (iii) violate or conflict with or constitute a default
under (or give rise to any right of termination, modification, cancellation or
acceleration under), any agreement or writing of any nature to which either ABEV
and Purchaser is a party or by which its assets may be bound or affected, or,
except as consented to by ABEV and Purchaser, result in the creation of any
Encumbrance against or upon any of their assets under any agreement or writing
to which either is a party or by which either or their assets may be bound or
affected; or (iv) impair or in any way limit any governmental or official
license, approval, permit or authorization of either ABEV and Purchaser. Other
than LaSalle National Bank, no consent or approval of or notification to any
Person is necessary or required in connection with the execution and delivery by
ABEV and Purchaser hereof or any writing relating hereto or the consummation of
the transactions-contemplated hereby or thereby.
C. Brokers and Finders. Neither ABEV and Purchaser nor any
officer, director or employee thereof, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and except as stated above, no broker or finder
has acted directly or indirectly for ABEV and Purchaser, in connection with this
Agreement and the transactions contemplated hereby.
D. Material Disclosures. No representation, warranty, covenant
or agreement by ABEV and Purchaser contained herein, and no statement contained
in any certificate, Schedule, Exhibit, list or other writing furnished to any of
the Selling Parties in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. All Schedules and Exhibits hereto and all copies of all writings
furnished to the Selling Parties hereunder or in connection with the
transactions contemplated hereby are accurate, true and complete. All
representations, warranties, covenants and
23
<PAGE>
agreements made by ABEV and Purchaser herein and facts and information contained
in the Exhibits and Schedules shall be true and correct as of the Closing Date
with the same effect as if they had been made at and as of the Closing Date.
There are no facts, conditions, or aspects relating to the past or present
operations of ABEV and Purchaser which are not set forth herein which would have
a material adverse affect upon the operation of the Business.
7. CLOSING TRANSACTIONS. On the Closing Date (or on a date otherwise
indicated herein):
A. The Selling Parties shall deliver or cause to be delivered
to ABEV and Purchaser:
(i) Such bills of sale, endorsements, assignments,
receipts and other instruments, in such form as are reasonably
satisfactory to ABEV and Purchaser, to evidence that the Assets are
transferred to Purchaser free and clear of all Encumbrances.
(ii) Such keys, lock and safe combinations, and new
bank signature cards and other similar items as ABEV and Purchaser
shall require to obtain full occupation and control of the Assets and
Business.
(iii) The Certificates required by Sections 9A and 9B
hereof.
(iv) The legal opinion of counsel to the Selling
Parties, in substantially the form as Schedule D attached hereto.
(v) Certificate(s) of good standing of Seller
certified by the Secretary of State of Kentucky and all other states in
which Seller is qualified to transact business as a foreign
corporation, dated within thirty (30) days of the Closing Date.
(vi) A copy of the Articles (or Certificate) of
Incorporation of Seller, certified by the Secretary of State of
Kentucky within thirty (30) days of the Closing Date.
(vii) Possession of the Real Estate.
(viii) Such estoppel letters as are reasonably
requested by ABEV and Purchaser, including those to be executed and
delivered by the landlords of the Real Estate, in form and substance
acceptable to ABEV and Purchaser's counsel.
24
<PAGE>
(ix) All consents, waivers and releases necessary,
required or appropriate to consummate the transactions contemplated
hereby.
(x) Uniform Commercial Code Tax, Lien and Judgement
Search results showing to the reasonable satisfaction of ABEV and
Purchaser that all Encumbrances, if any, on the Assets have been
released.
(xi) An Authorization of Inspection, in form and
substance acceptable to ABEV and Purchaser.
(xii) Certificates of Title, as appropriate,
evidencing Seller's ownership of the Assets, endorsed for transfer.
(xiii) The Closing Balance Sheet, and, as updated to
the end of the accounting period ended closest to the Closing, the
Inventory List, an updated Payables' List and an updated schedule of
Receivables.
(xiv) Certified copies of resolutions duly and
unanimously adopted by Seller's Board of Directors and Shareholders
unanimously approving the transactions contemplated by, and authorizing
the execution, delivery and performance by Seller of, this Agreement,
and a certificate as to the incumbency of officers of Seller executing
any instrument or other document delivered in connection with such
transactions.
(xv) Such documents and instruments as are necessary
to grant Purchaser, and no other Person, the right to use all trade
names currently used by Seller.
(xvi) Results of environmental assessments evidencing
and indicating no environmental risk with respect to the Real Estate.
(xvii) Such other documents as the ABEV and Purchaser
may reasonably request.
B. ABEV and Purchaser shall deliver or cause to be delivered
to the Selling Parties:
(i) The Purchase Price.
(ii) The Certificates required by Sections 10A and
10B hereof.
25
<PAGE>
(iii) Certified copies of resolutions duly adopted by
ABEV and Purchaser's Board of Directors approving the transactions
contemplated by, and authorizing the execution, delivery and
performance by ABEV and Purchaser of, this Agreement, and a certificate
as to the incumbency of officers of ABEV and Purchaser executing any
instrument or other document delivered in connection with such
transactions.
(iv) Certificates of good standing of ABEV and
Purchaser certified by the Secretary of State of the State of Delaware,
dated within thirty (30) days of the Closing Date.
(v) A copy of the Certificate(s) of Incorporation of
ABEV and Purchaser, certified by the Secretary of State of the State of
Delaware, dated within thirty (30) days of the Closing Date.
(vi) The legal opinion of Tom D. Wippman, P.C.,
counsel to ABEV and Purchaser, in the form of Schedule E, attached
hereto.
(vii) Such other documents as the Selling Parties may
reasonably request.
8. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
A. Access to Records and Properties of Seller. From and after
the date hereof until the Closing Date, the Selling Parties shall afford (i) to
all representatives of ABEV and Purchaser, free and full access at all
reasonable times to the assets, properties, books and records of Seller in order
that ABEV and Purchaser may have full opportunity to make investigations of the
assets and affairs of Seller, and to such additional data and other information
about the Business and properties of Seller as ABEV and Purchaser shall
reasonably request or that the Selling Parties believe in good faith ABEV and
Purchaser would want to see in making its investment decision hereunder, and
(ii) to the accountants of ABEV and Purchaser, free and full access at all times
to work papers and other records of Seller's accountants relating to the
Business. Any such investigation made pursuant to clause (i) or (ii) shall not
affect or otherwise diminish any of the representations, warranties, covenants
or agreements of the Selling Parties hereunder or ABEV and Purchaser's rights to
indemnification or otherwise. All information to which ABEV and Purchaser is
given access shall be kept strictly confidential except as required by law,
statute, rule or regulation and, should the transactions contemplated hereby
fail to be consummated, all such information shall be returned to the Selling
Parties.
26
<PAGE>
B. Operation of Business of Seller. From the date hereof to
the Closing Date, Seller shall operate only in the ordinary and regular course
of business, consistent with past practices, and shall:
(i) consult with ABEV and Purchaser on a regular
basis with respect to all decisions outside of the ordinary and
regular course of business involving or otherwise which may have a
material affect on the Business;
(ii) maintain the Assets in good repair, order and
condition, reasonable wear and use excepted;
(iii) maintain and keep in full force and effect all
Insurance Policies;
(iv) not, except as permitted under Section 5F: (a)
enter into any contract or agreement binding upon either which is to be
assumed by ABEV and Purchaser hereunder and which is not immediately
terminable upon thirty (30) days notice without cost; (b) extend credit
in the sale of the products or services other than in accordance with
prior credit practices; (c) lease, buy or otherwise acquire any real
estate or any interest therein; (d) increase any type of compensation
payable or to become payable to any of employees, directors, agents or
representatives; (e) make any change in its capital structure; (f) do
any other thing or act described in Section 5F hereof; or (g) enter
into any agreement, commitment or understanding to do any of the
foregoing;
(v) not do anything outside of the ordinary course of
business which has the intent or effect of changing the Purchase
Price;
(vi) use its best efforts to preserve intact its
business organizations, and to keep available to ABEV and Purchaser the
services of all present officers, employees and agents and use its best
efforts to preserve for ABEV and Purchaser the goodwill of suppliers,
customers and others having business relations with Seller; and
(vii) maintain its books, accounts and records in a
proper manner and in the usual, regular and ordinary manner on a basis
consistent with prior years.
C. Supplements. From time to time prior to the Closing Date,
the Selling Parties shall furnish to ABEV and Purchaser supplemental information
with respect to any matters or events arising or discovered subsequent to the
date hereof which, if existing or known on the date hereof, would have rendered
any statement, representation or warranty made by the
27
<PAGE>
Selling Parties or any information contained in any Exhibit or Schedule hereto
then inaccurate or incomplete; the furnishing of such supplemental information
shall not, however, affect or otherwise diminish any of the representations,
warranties, covenants or agreements of the Selling Parties hereunder. The
furnishing of any supplemental information which is materially different than
previously submitted information shall provide ABEV and Purchaser with the
unilateral right to terminate this Agreement and any duties and obligations
hereunder, without cost or liability.
Notwithstanding the foregoing, ABEV and Purchaser acknowledges that the
open purchase orders journals and open sales orders journals change in the
ordinary and regular course of business; therefore, the Selling Parties shall
only be obligated to provide ABEV and Purchaser with an updated list of such
journals as of the beginning of business on the Closing Date.
D. Risk of Loss. With respect to any material loss, damage,
condemnation or destruction of any of the Assets, upon any such loss, damage,
condemnation or destruction, ABEV and Purchaser may at its option, cancel and
terminate this Agreement or proceed as follows: if, in the event of any such
material loss, damage or destruction prior to the Closing, ABEV and Purchaser
elect not to terminate, the parties shall promptly attempt to agree on a
mutually satisfactory reduction in the total price to be paid for the Assets,
and the transaction shall be closed on the basis of such reduced price. If the
parties are unable to agree on such reduced value within seven (7) days after
notice to ABEV and Purchaser of such loss, damage, destruction or taking and
ABEV and Purchaser are not willing to conclude the transaction by payment of the
full price, then any party hereto may terminate this Agreement. In the event the
parties agree to a mutually satisfactory reduction of the price and the
transaction is closed on that basis, any insurance or condemnation proceeds
shall be paid to and retained by Seller. In the event the parties do not agree
to a mutually satisfactory reduction of the price, and ABEV and Purchaser elect
to conclude the transaction by payment of the full price, any insurance or
condemnation proceeds shall be paid to and retained by ABEV and Purchaser.
E. Consents, Waivers and Releases. The Selling Parties shall,
at their own cost and expense:
(i) Provide all necessary or appropriate consents and
comply with all provisions arguably relating to the transactions
contemplated hereby, including all federal, state or local laws, rules
and regulations;
(ii) Procure consents to the transactions
contemplated hereby, waivers of rights from, or releases from:
28
<PAGE>
(a) all parties holding security interests
on any of the Assets;
(b) the stockholders and directors of
Seller, which consent shall be deemed to have been granted as of the
date hereof by Owners' execution hereof,
(c) all other parties deemed necessary or
appropriate by ABEV and Purchaser.
All of such approvals, waivers, consents and releases shall be in form
and substance satisfactory to ABEV and Purchaser and their counsel, in their
sole discretion.
F. [THIS SECTION INTENTIONALLY LEFT BLANK]
G. Distributions to Owners from Seller. Between the date
hereof and September 30, 1996, there will not be, directly or indirectly,
distributions or dividends of any kind or nature from Seller to either Owner or
any Selling Parties' Affiliates except as permitted by ABEV. After September 30,
1996 and until the Closing, there will not be, directly or indirectly,
distributions or dividends of any kind or nature from Seller to either Owner or
any Selling Parties' Affiliates.
9. CONDITIONS OF OBLIGATIONS OF ABEV AND PURCHASER. The obligations of
ABEV and Purchaser to perform this Agreement are subject to the satisfaction of
the following conditions on or prior to the Closing Date:
A. Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements of the Selling Parties in
this Agreement or in any Schedule, Exhibit, certificate or document delivered in
connection herewith shall be true and correct in all material respects on the
Closing Date, and ABEV and Purchaser shall have received a Certificate signed by
the Selling Parties to that effect.
B. Performance of Obligations of the Selling Parties. The
Selling Parties shall have performed all agreements and obligations required to
be performed by them on or prior to the Closing Date, and ABEV and Purchaser
shall have received a Certificate signed by the Selling Parties to that effect.
C. Consents, Waivers and Releases. The Selling Parties shall
have obtained, or to the reasonable satisfaction of ABEV and Purchaser obviated
the need to obtain, all consents, waivers and releases (including those
described in Section 8E) from third parties necessary to execute and
29
<PAGE>
deliver this Agreement and consummate the transactions contemplated hereby.
Also, ABEV and Purchaser shall have obtained the consent of ABEV and Purchaser's
Board of Directors to execute and deliver this Agreement and consummate the
transactions contemplated hereby.
D. No Litigation. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated hereby, or seeking to obtain damages in respect thereof, or
involving a claim that consummation thereof would result in the violation of any
law, decree or regulation of any governmental authority having appropriate
jurisdiction.
E. Absence of Changes. Except as otherwise listed on Exhibit
5F hereto, since January 1, 1996, the Business has been operated only in the
ordinary and regular course and there has not been, and through the Closing Date
there will not be, with respect to Seller, any thing or act described in Section
5F hereof, and there shall not have been, with respect to the Business, any
adverse changes.
F. Completion of Review by ABEV and Purchaser. ABEV and
Purchaser shall have completed their business, accounting, financial,
environmental and legal review of the Business and Assets, and ABEV and
Purchaser shall, in their sole and absolute discretion, be satisfied with the
results of such investigation or otherwise waive this condition.
G. Financing and Additional Financial Matters. ABEV and
Purchaser shall have procured financing in an amount and on terms and conditions
that are satisfactory to ABEV and Purchaser, in their sole discretion. Also, as
of the Closing Date, ABEV and Purchaser shall be satisfied that (i) Seller shall
have paid all liabilities in the ordinary course of business, and (ii) for the
period September 30, 1996 to the Closing Date, there shall have been no
distributions of any nature whatsoever from Seller to Owners or any Selling
Parties' Affiliates, except as permitted hereby. Finally, ABEV and Purchaser
shall have received satisfactory evidence that as of September 30, 1996, all
expenses which are or should have been accrued by Seller, as provided by ABEV's
accountants, shall have been accrued (or paid), and, as of such date and the
Closing Date, there shall be sufficient cash on hand to discharge such
liabilities and accruals. Finally, ABEV and its accountants shall be satisfied
that the only audit which is required of Seller under appropriate SEC guidelines
is for the twelve-month period ended September 30, 1996.
30
<PAGE>
H. Closing Documents. The Selling Parties shall have
delivered, or shall have caused the delivery of, all appropriate documents and
instruments described in Section 7 hereof.
10. CONDITIONS OF OBLIGATIONS OF THE SELLING PARTIES. The obligations
of the Selling Parties to perform this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
A. Representations Warranties Covenants and Agreements . The
representations, warranties, covenants and agreements of ABEV and Purchaser
herein or in any Schedule, Exhibit, certificate or document delivered in
connection herewith shall be true and correct in all material respects on the
Closing Date, and the Selling Parties shall have received a Certificate signed
by ABEV and Purchaser to that effect.
B. Performance of Obligations of ABEV and Purchaser. ABEV and
Purchaser shall have performed all agreements and obligations required to be
performed by it on or prior to the Closing Date, and the Selling Parties shall
have received a Certificate signed by ABEV and Purchaser to that effect.
C. Consents Waivers and Releases. ABEV and Purchaser shall
have obtained, or to the reasonable satisfaction of the Selling Parties obviated
the need to obtain, all consents, waivers and releases from third parties
necessary to execute and deliver this Agreement, buy the Assets and consummate
the transactions contemplated hereby.
D. No Litigation. No action, suit or other proceeding shall be
pending before any court, tribunal or governmental authority seeking or
threatening to restrain or prohibit the consummation of the transactions
contemplated hereby, or seeking to obtain damages in respect thereof, or
involving a claim that consummation thereof would result in the violation of any
law, decree or regulation of any governmental authority having appropriate
jurisdiction.
E. Closing Documents. ABEV and Purchaser shall have delivered,
or shall have caused the delivery of, all appropriate documents and instruments
described in Section 7 hereof
11. CLOSING NOT A WAIVER. The fact that the parties have chosen to
consummate the transactions contemplated hereby shall not act or be deemed or
construed as a waiver of either party or estop either party from pursuing their
respective rights to indemnification hereunder or other remedies for any reason
whatsoever.
31
<PAGE>
12. POST-CLOSING COVENANTS.
A. Restrictive Covenants.
(i) Nondisclosure. Each Owner acknowledges that
he/she has been and will be entrusted with trade secrets, marketing,
operating and strategic plans, customer and supplier lists, proprietary
information recipes and other confidential or specialized data and/or
information relative to the Business, whether now existing or to be
developed or created after the Closing Date (collectively, "TRADE
SECRETS"). Each Owner covenants and agrees that he/she shall at all
times after the date hereof hold in strictest confidence any and all
Trade Secrets that may have come or may come into his/her possession or
within his/her knowledge concerning or related to the products,
services, processes, recipes, businesses, suppliers, customers and
clients of Seller and the Business and also that the Trade Secrets
constitute Assets of Seller and not of any individual. Each Owner
covenants and agrees that neither he/she nor any Person controlled by
him/her will for any reason, directly or indirectly, for
himself/herself or for the benefit of any other Person, use, copy,
divulge or otherwise disseminate or disclose any of the Trade Secrets
owned or used by, or licensed to, Seller or any of its affiliates or
otherwise relating to Seller or the Business, provided that either
Owner may disclose Trade Secrets pursuant to an order by a court of
competent jurisdiction, provided, further, that such Owner shall give
ABEV and Purchaser notice of such order and any court pleading
requesting such disclosure, in order to provide ABEV and Purchaser with
an opportunity to prevent such disclosure or procure an appropriate
protective order.
(ii) Customers and Trade Secrets. Each Owner
acknowledges that customers and customer accounts and the Trade Secrets
of Seller will, after the Closing, at all times be the sole and
separate property of Purchaser, in which neither Owner has any rights
whatsoever, and all activities of or work performed by either Owner for
or on behalf of Purchaser after the Closing will be performed solely
for the benefit of Purchaser and the goodwill resulting from such
efforts by Owners is and at all times will be the sole and separate
property of Purchaser, which goodwill is intended to be protected, in
part, by this Section.
(iii) Non-Solicitation Non-Hire. Each Owner agrees
that from the Closing Date and continuing for a period (the
"NON-COMPETE PERIOD") of four (4) years from the Closing Date, neither
he/she nor any person or enterprise controlled by him/her will solicit
or hire or contract with, for employment, consulting or any other
reason,
32
<PAGE>
any person (except family members) who was employed by ABEV, Purchaser or Seller
or any of such parties' affiliates as a manager, sales person, officer, office
head, buyer, driver, accountant/controller or other key employee at any time
within one (1) year prior to the time of the act of solicitation, or hire.
(iv) Non-Competition by Owners. During the
Non-Compete Period, each Owner agrees that neither he/she nor any
person or enterprise controlled by him/her will become a stockholder,
director, officer, agent, employee or representative of or consultant
to a corporation or member of a partnership or limited liability
company, engage as a sole proprietor in any business, act as a
consultant to any of the foregoing or otherwise engage, directly or
indirectly, in any enterprise which competes with the Business in any
geographic area in which Seller currently, and the Purchaser
subsequently, carries on such Business or contemplates or has the
capability of doing business on the date of the acts described above,
including the geographic areas set forth in Exhibit 12A(iv); provided,
however, that the foregoing shall not prohibit the ownership of less
than two percent (2%) of the outstanding shares of the stock of any
corporation engaged in any business, which shares are regularly traded
on a national securities exchange or in any over-the-counter market.
The Non-Compete Period shall be extended for that period of time during
which either Owner is in violation of the covenants contained in this
Section 12A.
(v) Relief, Reformation, Severability. Each Owner
agrees that the covenants contained in this Section 12 are separate and
are reasonable in their scope and duration and may be enforced by
specific performance or otherwise. Neither Owner shall raise any issue
of reasonableness as a defense in any proceeding to enforce any of the
covenants herein. Notwithstanding the foregoing, in the event that a
covenant included in this Section 12 shall be deemed by any court to be
unreasonably broad in any respect, then, to the extent permitted, the
court which makes such finding shall modify such covenant for the
purpose of making such covenant reasonable in scope and duration. The
validity, legality or enforceability of the remaining provisions of
this Agreement shall not be affected by any such modification.
(vi) Remedies. Each Owner acknowledges that any
breach of the restrictive covenants herein will cause irreparable harm
to ABEV and Purchaser, and that such harm will be difficult if not
impossible to ascertain. Therefore, if any action or proceeding is
commenced by or on behalf of ABEV or Purchaser to enforce the
provisions hereof, they shall be entitled to equitable relief,
including injunction, against any actual or threatened breach hereof,
and any
33
<PAGE>
damages arising therefrom including, without limitation, reasonable
fees of its attorneys and their support staff and all other costs and
expenses incurred by either ABEV or Purchaser in good faith in
connection therewith without bond and without liability should such
relief be denied, modified or vacated. Neither the right to obtain such
relief nor the obtaining of such relief shall be exclusive of or
preclude ABEV or Purchaser from any other remedy. Each Owner hereby
waives the claim or defense to an action for equitable relief by the
other that ABEV or Purchaser has an adequate remedy at law or has not
been or is not being irreparably injured by such breach. FURTHERMORE,
EACH OWNER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE OF ANY NATURE ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RESTRICTIVE COVENANTS
CONTAINED IN THIS SECTION 12 HEREOF. INSTEAD, ANY DISPUTES RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
B. Inventions. Owners shall and hereby do assign to ABEV and
Purchaser their entire right, title and interest in all discoveries, computer
programs, processes and improvements, patentable or otherwise, trade secrets and
ideas, writings and copyrightable material, which have been or may be conceived
by either of them or developed or acquired by either of them during the
Non-Compete Period, which may pertain directly or indirectly to the Business.
Each Owner agrees to promptly and fully disclose in writing all such
developments. Each Owner acknowledges that all Trade Secrets and other ideas
relating to the Business which were or will be conceived by him/her before the
date hereof or during the Non-Compete Period have been, or shall be, assigned by
them to Purchaser. Each Owner will, upon ABEV and Purchaser's request, execute,
acknowledge and deliver to ABEV and Purchaser all instruments and do all other
acts which are necessary or desirable to enable ABEV and Purchaser to file and
prosecute applications for, and to acquire, maintain and enforce all letters,
patents, trademark registrations, or copyrights or enforce all rights in any
intangible or intellectual property in all countries.
C. Collection of Receivables. From and after the Closing,
Purchaser shall have the sole right and authority to collect, for its own
account, all of the Receivables, and to endorse in Seller's name, any checks or
drafts received on account of any such Receivables or such other items. Each
Owner agrees that he/she will transfer or deliver to Purchaser, promptly after
the receipt thereof, any cash or other property which he may receive after the
Closing in respect of any claims, contracts, licenses, leases,
34
<PAGE>
commitments, sales orders, purchase orders, receivables of any character or any
other items related directly or indirectly to the Business.
D. Power of Attorney. Effective as of the Closing, each Owner
hereby constitutes and appoints Merrick M. Elfinan, Alan F. Sussna or their
successors and assigns, with the full power and right of substitution, as
Owners' true and lawful attorney: (i) to institute and prosecute all proceedings
which Purchaser may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Assets; (ii) to defend or
compromise any and all actions, suits or proceedings in respect of any of the
Assets, and to do all such acts and things in relation thereto as ABEV and
Purchaser shall deem necessary or advisable; and (iii) to take all action which
ABEV and Purchaser may reasonably deem proper in order to provide ABEV and
Purchaser with all of the benefits relating to the Assets. Each Owner
acknowledges that the foregoing powers are coupled with an interest and shall be
irrevocable. Purchaser shall be entitled to retain for its own account any
amounts collected pursuant to the foregoing powers, including any amounts
payable as interest in respect thereof.
E. Subrogation of ABEV and Purchaser. In the event that ABEV
or Purchaser shall become liable for or suffer any damage with respect to any
matter which was covered by insurance maintained by Seller on or prior to the
Closing, ABEV and Purchaser shall be and hereby are each subrogated to any
rights of Seller under such insurance coverage, and, in addition, each Owner
agrees to promptly remit to ABEV and Purchaser any insurance proceeds which
he/she may receive on account of any such liability or damage.
F. No Adverse Action. Neither Owners nor any of their agents
or representatives shall take any action, directly or indirectly, that would in
any way adversely affect ABEV and Purchaser's efforts to obtain all proper
permits and authorizations necessary or appropriate to operate the Business in
any manner deemed reasonable by ABEV and Purchaser.
G. Indemnification Matters. From and after the Closing, to the
extent that either Owner has a right, either legal or equitable, to
indemnification, subrogation or other similar right or remedy from Seller for
any matter whatsoever, such Owner shall waive such right or remedy and shall not
attempt, whether directly or indirectly, to enforce or collect such right or
remedy at any time.
13. INDEMNIFICATION. EACH OF THE TERMS AND CONDITIONS CONTAINED IN
SECTION 13 OF THE MERGER AGREEMENT IS HEREBY INCORPORATED HEREIN AS THOUGH FULLY
SET FORTH HEREIN, AND ALL OF THE INDEMNIFICATION
35
<PAGE>
DUTIES AND OBLIGATIONS OF THE SELLING PARTIES THEREIN ARE HEREBY DEEMED TO BE
THE JOINT AND SEVERAL DUTIES AND OBLIGATIONS OF EACH SELLER HEREIN. FURTHERMORE,
SELLERS AGREE AND ACKNOWLEDGE THAT THE INDEMNIFICATION PROCESS AND PROCEDURES
SET FORTH IN SECTIONS 13C-F, INCLUSIVE (INCLUDING RIGHTS OF SET- OFF), SHALL BE
THE INDEMNIFICATION PROCESS AND PROCEDURES WHICH GOVERN SELLERS' JOINT AND
SEVERAL INDEMNIFICATION OBLIGATIONS HEREIN.
EACH OF THE SELLING PARTIES AGREES AND ACKNOWLEDGES THAT ANY MATTER
GIVING RISE TO INDEMNIFICATION HEREUNDER SHALL GIVE RISE TO INDEMNIFICATION
UNDER THE MERGER AGREEMENT, IT BEING THE PARTIES' INTENT TO "CROSS-DEFAULT"
BREACHES AND DEFAULTS HEREUNDER WITH THE MERGER AGREEMENT.
NONE OF THE FOREGOING REMEDIES SHALL BE MUTUALLY EXCLUSIVE.
14. SURVIVAL OF REPRESENTATIONS WARRANTIES AGREEMENTS AND COVENANTS.
A. All representations, warranties, agreements and covenants
made by any party hereto in this Agreement shall survive the Closing of the
transactions hereunder.
B. The representations and warranties hereunder shall not be
affected or diminished by any investigation at any time by or on behalf of the
party for whose benefit such representations, warranties, covenants and
agreements were made, or the fact that such representations, warranties,
agreements and covenants were made to such party's knowledge.
15. MISCELLANEOUS.
A. Manner of Closing. At the Closing, all transactions shall
be conducted substantially concurrently and no transaction shall be deemed to be
completed until all are completed.
B. Access to Records. ABEV and Purchaser shall afford to
Owners and their agents, the opportunity, upon reasonable advance notice, to
examine and make copies of the books and records of Seller having an effect on
all periods prior to the Closing Date, in connection with tax and financial
reporting matters and other bona fide business purposes, and ABEV and Purchaser
shall use reasonable efforts to retain such books and records for a period of
four (4) years from the date of such books and records.
36
<PAGE>
C. Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the parties and their respective
executors, successors and assigns. Furthermore, should either Owner already
have, or in the future create, a trust for his benefit or the benefit of any
family member, then Owners' signatures below will constitute and, if necessary,
such trust will execute such instruments as are necessary to evidence, such
trust being jointly and severally liable for Owners' obligations hereunder. By
Owners' execution hereof, each hereby acknowledges that any trust to which
either has transferred, or in the future transfers, assets with the intent,
purpose or effect of estate planning purposes or to avoid liability hereunder or
of which either is the trustee or is a beneficiary, shall be jointly and
severally liable for all of Owners' obligations hereunder, without the necessity
for further action on any party's behalf Notwithstanding the foregoing, each
Owner is prohibited from assigning his/her interests hereunder, by operation of
law or otherwise. Each Owner hereby consents to a collateral assignment of
ABEV's and Purchaser's rights hereunder to a lender, understanding that such
lender shall have the ability to enforce the rights of ABEV and Purchaser
granted herein.
D. Entire Agreement Amendments. This Agreement, the Exhibits
and Schedules attached hereto, and the other writings referred to herein or
delivered in connection herewith contain the entire understanding of the parties
with respect to its subject matter, and supersedes all prior understandings and
agreements. This Agreement may be amended only by a written instrument duly
executed by the parties. Any reference herein to this Agreement shall be deemed
to include the Exhibits and Schedules attached hereto. If any provision of this
Agreement is determined to be illegal or unenforceable, such provision will be
deemed amended to the extent necessary to conform to applicable law or, if it
cannot be so amended without materially altering the intention of the parties,
it will be deemed stricken and the remainder of the Agreement will remain in
full force and effect.
E. Headings. The section and subsection headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
F. Notices. All notices, claims, certificates, requests,
demands and other communications ("communications") hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
mailed (by registered or certified mail, postage prepaid) or sent by overnight
courier service or facsimile addressed as follows:
If to any of the Selling Parties,
in care of Mr. Grogan, at: Bobby L. Grogan
Route #2
37
<PAGE>
Arlington, KY 42021
With a copy to: Gary B. Houston, Esq.
WHITLOW ROBERTS HOUSTON & STRAUB
Old National Bank Building
300 Broadway
Paducah, KY 42002-0995
Facsimile: (502)443-4571
If to ABEV and Purchaser: c/o Sterling Capital, Ltd.
650 Dundee Road, Suite 370
Northbrook, IL 60062
Facsimile: (847)480-0199
With a copy to: Tom D. Wippman, P.C.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Facsimile: (847)480-0199
or to such other address as the person to whom a communication is to be given
may have furnished to the others in writing in accordance herewith. A
communication given by any other means shall be deemed duly given on the earlier
of when actually received by the addressee or three (3) days after sending such
communication. Notice hereunder to either Owner shall be deemed to be notice to
each of the Selling Parties.
G. Public Announcements. All public announcements relating to
this Agreement or the transactions contemplated hereby, including announcements
to employees, will be made only as may be agreed upon jointly by the parties
hereto, or as ABEV and Purchaser considers required or appropriate to comply
with applicable law. Any governmental, public or private inquiries or requests
for information shall be promptly referred to ABEV and Purchaser.
H. Further Assurances. After the Closing Date, without further
consideration, the parties shall execute and deliver such further instruments
and documents as either party shall reasonably request to consummate the
transactions contemplated hereby.
I. Waivers. Any party to this Agreement may, by written notice
to the other party hereto, waive any provision of this Agreement. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent, same or different breach.
38
<PAGE>
J. Materialitv and Knowledge. The terms "MATERIAL" or
"MATERIALLY" or "MATERIALITY" shall mean either (i) the existence of a fact or
condition or facts or conditions which, if a dollar amount is readily
ascertainable with respect to such, has a value, either individually or in the
aggregate, of more than $10,000.00, except if such fact or condition relates to
taxes, claims and/or litigation in which case such matter shall be material
irrespective of the dollar amount, or (ii) the determination by a lender, in
such lender's sole and absolute discretion, that such fact or condition is, or,
if known to such lender would be, material for purposes of its making a loan to
ABEV and Purchaser in order to consummate the transactions hereunder or to avoid
any acceleration of such loan, or (iii) any fact or condition which gives rise
to any right of termination, cancellation, acceleration or modification of any
agreement or understanding to which Seller is a party and such right has been
exercised. The term "KNOWLEDGE" shall mean (i) actual knowledge or notice, (ii)
that knowledge which a party should know after having made all reasonable
inquiries and (iii) that an individual or individuals making a statement as to
its, his or her "KNOWLEDGE" has made all reasonable inquiries regarding the
facts and circumstances relating to such statement. For purposes of this
Agreement, the knowledge of any of the Selling Parties shall be deemed to be the
knowledge of all of the Selling Parties (i.e., the knowledge of one of the
Selling Parties shall be imputed to all other Selling Parties, including both
Owners), and the receipt of a notice by any shall be deemed to be receipt by
all. The knowledge of any employee of Seller shall be deemed to be the knowledge
of Seller.
K. Counterparts. The Agreement may be executed in one or more
counterparts, but all such counterparts shall constitute one and the same
instrument.
L. Certificate. A Certificate shall mean a certificate signed
by the individual stating that (i) such individual who is signing the
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the individual's knowledge, after due
inquiry, such certificate does not misstate any material fact and does not omit
any fact necessary to make the certificate not misleading.
M. Use of Certain Terms. The term "Seller", and "Selling
Parties" shall also include all predecessors thereof and businesses acquired by
or merged therewith, or businesses whose liabilities (some or all) have been
assumed by Seller or the Selling Parties. The term "each of the Selling Parties"
shall mean any or all thereof, including Owners, whichever has the broadest
meaning given the particular context. The term "PERSON" shall mean an
individual, a partnership, a joint venture, a joint stock company, a
corporation, a trust, an unincorporated organization, a limited liability
39
<PAGE>
company, any other legal entity and a government, governmental body or
quasi-governmental body, or any department, agency or political subdivision
thereof.
N. Applicable Law. The terms and conditions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware applicable to agreements between Delaware residents entered into and to
be performed entirely within Delaware.
O. Consent to Jurisdiction. For those matters or disputes of
any nature arising out of, connected with, related or incidental to a party
seeking to compel action (other than payment) or cease a prohibited action, the
parties hereto hereby irrevocably submit themselves to the exclusive
jurisdiction of the courts of the State of Kentucky located in the City of
Paducah, Kentucky and to the jurisdiction of the United States District Court
for the Western District of Kentucky for the purpose of bringing any action that
may be brought in connection with the provisions hereof. The parties hereto
hereby individually agree that they shall not assert any claim that they are not
subject to the exclusive jurisdiction of such courts, that the venue is
improper, that the forum is inconvenient or any similar objection, claim or
argument. Service of process on any of the parties hereto with regard to any
such action may be made by mailing the process to such Persons by regular or
certified mail to the address of such Person set forth herein or to any
subsequent address to which notices shall be sent.
P. Agreement to Arbitrate. Except for those matters described
in Section 14O above, in the event of any other dispute arising out of,
connected with, related or incidental to this Agreement and the documents or
instruments delivered in connection herewith, such dispute shall be submitted to
arbitration in accordance with the terms of this Section. The party who is
alleging that a dispute exists shall send a notice of such dispute to all other
parties, which notice shall set forth in detail the dispute, the parties
involved and the position of such party with respect thereto. Within ten (10)
business days after the delivery of such a notice, counsel for the parties shall
deliver a joint request to the Managing Partner of the Cincinnati, Ohio Office
of Strauss & Troy, Esq., requesting such person to deliver a list of ten (l0)
prospective arbitrators, all of whom such partner believes to be experienced in
commercial arbitration, along with a brief resume of each such person. The
parties shall do all things necessary to reasonably cooperate in the selection
of the ten (10) persons, including holding Strauss & Troy harmless from any and
all claims arising out of such selection and arbitration. If such Managing
Partner declines, the list often (10) shall be selected by the party asking for
arbitration receiving a list from any private dispute resolution firm with
offices in Cincinnati. The arbitrator shall be selected as follows: within three
(3) days after the list is delivered to
40
<PAGE>
each party, each party shall assign rank of preference to each available
arbitrator, with number one being the most preferable and ten being the least
preferable (i.e., a different rank must be assigned to each available
arbitrator) and deliver such rankings confidentially to the person or firm which
created the list; in the event of a tie, the person or firm which created the
list shall then select the arbitrator from the two potential arbitrators which
have tied. The single arbitrator with the lowest total score shall be the
arbitrator for the dispute. The arbitrator so selected shall schedule a hearing
in Paducah, Kentucky, on the disputed issues within forty-five (45) days after
his appointment, and the arbitrator shall render his decision after the hearing,
in writing, as expeditiously as is possible, and shall be delivered to the
parties. The arbitrator shall render his decision based on written materials
supplied by the parties to the arbitration in support of their respective oral
presentations at the hearing, and no party shall be entitled to discovery in
such matter. Each party shall supply a copy of any written materials to be
submitted to the arbitrator at least fifteen (15) days prior to the scheduled
hearing. The parties agree that the arbitrator shall not have any power or
authority to award punitive damages. A default judgment may be entered against
any party who fails to appear at the arbitration hearing. Such decision and
determination shall be final and unappealable and shall be filed as a judgment
of record in any jurisdiction designated by the successful party. The successful
parry shall be entitled to recover all fees, costs and expenses incurred in
connection with such arbitration. The parties hereto agree that this paragraph
has been included to rapidly and inexpensively resolve any disputes between them
with respect to the matters described above, and that this paragraph shall be
grounds for dismissal of any court action commenced by any party with respect to
a dispute arising out of such matters.
THE PARTIES AGREE THAT ANY ARBITRATION SHALL BE GOVERNED BY AND PURSUANT TO THE
FEDERAL ARBITRATION ACT, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
Q. Exceptions to Exclusive Jurisdiction and Mandatory
Arbitration. Notwithstanding the provisions of Sections 15O and 15P hereof, in
the event that there is a third party action which may give rise to rights of
indemnification or contribution from one party(ies) to another, the parties
hereto irrevocably submit themselves to the jurisdiction of the court in which
such third party action is brought, and the party to be indemnified may, but
shall not be obligated to, bring a third party action or other appropriate
proceeding to enforce such rights of indemnification or contribution. The
foregoing is not intended to confer any rights upon any other party other than
the parties hereto.
41
<PAGE>
R. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, singular and plural as the identity
of that person referred to requires.
S. Joint and Several Obligations. The duties and obligations
of each of the Selling Parties are joint and several, and the Selling Parties
hereby acknowledge the same, and each of the Selling Parties hereby guarantees
performance of all duties and obligations of the other under and pursuant to
this Agreement. Furthermore, where there is imposed an obligation or duty upon
one Selling Party, each of the other Selling Parties shall be jointly and
severally liable for ensuring the prompt compliance of such obligation or duty
thereof Notwithstanding the foregoing, after the Closing, neither Owner shall be
entitled to contribution or other similar remedy or remedies from Seller for
Owners' obligations hereunder, it being the intent that only the Owners (or
their successors, assigns, trusts, etc.) shall be responsible for the indemnity
obligations hereunder.
T. Effect of Disputes. Notwithstanding the fact that there may
from time to time be disputes among the parties concerning the terms and
conditions hereof, the parties agree not to under any circumstances, disparage,
criticize or denigrate the talents, skills, prospects, abilities, integrity or
character of the other parties hereto, or such parties' management, directors,
employees, agents or representatives (including those of ABEV and Purchaser's
affiliates). Each of the Selling Parties further agrees that each will not, at
any time after the date hereof and without ABEV and Purchaser's written consent,
contact any past, present or prospective customer, supplier, employee or agent
or representative of Seller or ABEV and Purchaser with the intent, purpose or
effect of injuring the reputation, business or business relationships of ABEV
and Purchaser. The provisions of this Section shall survive the execution and
termination hereof irrespective of the reason for such termination.
U. Mutual Drafting. This Agreement is the joint product of
ABEV and Purchaser, Seller and Owners and their respective counsel, and each
provision hereof has been subject to the mutual consultation, negotiation and
agreement of such parties and counsel, and shall not be construed for or against
any party hereto.
(end of text)
************************************
42
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
ATLANTIC BEVERAGE COMPANY, INC.
By_____________________________
Merrick M. Elfman, Chairman
GROGAN'S MERGER CORP.
By______________________________
Merrick M. Elfman, Chairman
GROGAN'S SAUSAGE, INC.
By_____________________________
Bobby L. Grogan, President
_______________________________
Bobby L. Grogan
_______________________________
Betty Ruth Grogan
43
<PAGE>
SCHEDULE A
Assets
Seller agrees to and will sell, transfer, assign and deliver
to ABEV and Purchaser, free and clear of all liens, claims and Encumbrances,
except those which ABEV and Purchaser has expressly agreed to assume pursuant to
SCHEDULE C hereof, all of the assets used in the Business other than the
Excluded Assets (as described on SCHEDULE B hereof), as they exist at the
Closing, which Assets include, but are not limited to, the following:
the machinery, equipment, tools, supplies, leasehold improvements, construction
in progress, furniture and fixtures, trucks, automobiles, vehicles and other
fixed assets owned or leased (as indicated) by Seller, as identified on Schedule
A(i);
(i) the inventories of Seller including, without limitation,
inventories of raw materials, work in process and finished goods, as identified
on Schedule A(ii);
(ii) all of Seller's right, title and interest in their
customer accounts, customer account contracts, and other rights to provide
services to their customers, as identified on Schedule A(iii);
(iii) all permits, licenses, governmental approvals,
contracts, franchise rights, patents, trademarks, trade names, trade secrets,
corporate names, telephone numbers, good will and all other proprietary rights
and intangible assets used in the Business, as identified on Schedule A(iv);
(iv) all cash and cash equivalents and investments, whether
short-term or long-term, of Seller, including prepaid expenses, bank accounts,
certificates of deposit, treasury bills and securities;
(v) all Receivables of Seller, including, without limitation,
all trade and customer accounts receivable arising from service, sales of
inventory in the ordinary course of business, notes receivable and insurance
proceeds receivable;
(vi) all operating data, books, files, documents and records
of Seller, including without limitation, customer and supplier lists, insurance
policies, financial, accounting and credit records, marketing information,
advertising materials, correspondence, budgets and other similar documents and
records which pertain to the Assets;
44
<PAGE>
(vii) all other known and unknown, liquidated or unliquidated,
contingent or fixed rights, choses in action or causes of action of every nature
and kind which Seller has or may have against any third party and all rights
which may pertain to the Assets;
(viii) office supplies and other consumable supplies; and
(ix) any and all goodwill related to the foregoing.
Notwithstanding the foregoing, the omission from the foregoing list of any asset
of Seller necessary for or used in connection with the operation of the Business
is hereby deemed an Asset, and shall be transferred to ABEV and Purchaser in the
manner described above.
45
<PAGE>
SCHEDULE B
Excluded Assets
Anything to the contrary in SCHEDULE A notwithstanding, the
Assets shall exclude the following assets:
the Purchase Price and the Selling Parties' other rights under this Agreement;
(i) any shares of capital stock of Seller which are owned and
held as treasury shares;
(ii) the corporate minute books and stock records of Seller;
and
(iii) all interests of any of the Selling Parties, in and
rights of and relating to, any real property which any of the Selling Parties
own, lease or have any other interest.
46
<PAGE>
SCHEDULE C
Assumed Liabilities
ABEV and Purchaser are not assuming or taking responsibility for any
obligation or liability of any of the Selling Parties of any nature whatsoever,
except (i) customer orders pending as of the Closing Date, which orders have
been taken in the ordinary and regular course of business on terms and
conditions (including pricing, delivery and payment) consistent with past
business practices, and (ii) those obligations and liabilities expressly set
forth on Schedule C1 hereto. By way of example, and not meant to exhaust those
obligations and liabilities of the Selling Parties, whether contingent, fixed,
liquidated or unliquidated, NOT being assumed by ABEV and Purchaser are the
following:
(a) any obligations or liabilities of any of the Selling
Parties arising under or disclosed in this Agreement;
(b) any obligations or liabilities of any of the Selling
Parties for federal, state or local income tax liability arising from the
operations of the Business, arising out of the sale of the Assets or any other
matter of any nature;
(c) any obligation for any transfer, sales or other taxes,
fees, levies, franchises or impositions of any nature (including interest and
penalties) arising from the operations of the Business, out of the sale of the
Assets or any other matter of any nature; or
(d) any obligation for expenses incurred in connection with
the operations of the Business and sale of the Assets prior to the date hereof.
Any liability of Seller which is omitted from this
Schedule shall be deemed to be a liability which is NOT being assumed
by ABEV and Purchaser.
47
<PAGE>
EXHIBIT 2.15
<PAGE>
EXECUTION COPY
REAL ESTATE PURCHASE AGREEMENT
DATED SEPTEMBER 27, 1996
AMONG
GROGAN'S MERGER CORP.
BOBBY L. GROGAN
AND
BETTY GROGAN
<PAGE>
REAL ESTATE PURCHASE AGREEMENT
THIS REAL ESTATE PURCHASE AGREEMENT (this "Agreement") is made and
entered into the 27th day of September, 1996, by and between BOBBY L. GROGAN and
his wife BETTY GROGAN, Kentucky residents and as joint tenants (together,
"Sellers") and GROGAN'S MERGER CORP., a Delaware corporation ("Purchaser").
R E C I T A L S:
A. Concurrently herewith, (i) Purchaser, Atlantic Beverage Company,
Inc., a Delaware corporation ("ABEV") and Grogan's Farms, Inc., a Kentucky
corporation ("GFI") and Sellers, as the sole shareholders of GFI, have executed
that certain Agreement and Plan of Reorganization (the "MERGER AGREEMENT")
pursuant to which GFI will be merged with and into Purchaser in a transaction
intended to qualify as a "reorganization" within the meaning of Section
368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "CODE") and
(ii) Purchaser, ABEV, Grogan's Sausages, Inc., a Kentucky corporation ("GSI")
and Sellers entered into that certain Asset Purchase Agreement (the "APA")
pursuant to which GSI will sell certain of its assets to Purchaser. GSI and GFI
are hereinafter sometimes referred to together as the "Companies", and the
Companies and Sellers are hereinafter sometimes referred to collectively as the
"Selling Parties". Capitalized terms not otherwise defined herein shall have the
meanings ascribed to such terms in the Merger Agreement.
B. Sellers are the owners of certain real estate legally described on
Exhibit A attached hereto and made a part hereof (the "Land"). The Land is
improved with a one-story metal frame office, and warehouse and kill-floor
facility which contains approximately 25,000 square feet (the "Improvements")
owned by Sellers and commonly known as Route 2, Arlington, KY.
C. Purchaser desires to buy from Sellers the Land and all
Improvements, structures, fixtures presently located therein and thereon.
A G R E E M E N T S
1. AGREEMENT TO PURCHASE. Sellers agree to sell, convey and assign to
Purchaser, and Purchaser agrees to purchase and accept from Sellers, under the
terms and conditions and for the Purchase Price (hereinafter defined) set forth
below, the Land, the Improvements, all fixtures and he personal and tangible
property owned by Sellers now or hereafter located on the Land, but excluding
the personal momentos and the like described on Exhibit B (the "Personal
Property"). The Land, Improvements and Personal Property are hereinafter
referred to as the "Real Estate".
<PAGE>
2. PURCHASE PRICE. The purchase price ("Purchase Price") for the Real
Estate shall be an amount equal to ONE MILLION DOLLARS ($1,000,000.00), plus or
minus prorations and adjustments in accordance with this Agreement. The Purchase
Price shall be payable by Purchaser depositing in the Closing Escrow
(hereinafter defined) the sum of ONE MILLION DOLLARS ($1,000,000.00) (plus or
minus prorations pursuant to Section 6 below), by certified or cashier's check
or by wire transfer to the Title Company (hereinafter defined) or its closing
agent.
3. CONDITIONS.
A. Sellers hereby covenant and agree that they have delivered
or shall deliver or make available to Purchaser the following items within ten
(10) days following the date of Sellers' execution of this Agreement:
(i) A schedule setting forth the amount of the most
recent ascertainable real estate, personal property and any other taxes
assessed against the Real Estate, all utility and insurance charges and
all other expenses of every kind and nature whatsoever incurred or
accrued in connection with the Real Estate or the repair, upkeep,
maintenance and operation thereof for the years 1994, 1995 and 1996 to
date.
(ii Copies of all building permits, certificates of
occupancy and other necessary governmental permits, licenses or
approvals pertaining to the Real Estate.
(iii) All plans, surveys, specifications and
architectural drawings relating to the Real Estate to be delivered
hereunder.
(iv) A current schedule listing all Personal
Property.
(v) Copies of all notices of violations of zoning,
building, fire, environmental or health codes, ordinances, rules or
regulations, which have not been heretofore corrected.
B. Sellers shall grant Purchaser, and its agents,
representatives and lenders, the right to enter upon the Land and Improvements,
upon reasonable notice, to inspect the Real Estate.
C. The consummation of the transactions contemplated hereby is
expressly conditioned and contingent on the simultaneous (or substantially
simultaneous) consummation of the transactions contemplated by the Merger
Agreement and the APA. If for any reason, the Merger is not consummated, then
there is and will be no requirement that the Real Estate be acquired by
Purchaser.
-2-
<PAGE>
D. Evidence reasonably satisfactory to Purchaser that all
leases in respect of the Real Estate have been terminated, and that Purchaser is
entitled to sole and exclusive possession thereof
4. EVIDENCE OF TITLE.
A. Sellers shall, at their cost, deliver or cause to be
delivered to Purchaser, in form and substance satisfactory to Purchaser, within
twenty (20) days following execution hereof by Sellers:
(i) A commitment by either Stewart or Commonwealth
Title Insurance Company (either, the "Title Company") to issue an ALTA
Form B or similar owner's title insurance policy (the "Title Policy")
in the amount of the Purchase Price, naming Purchaser or its nominee as
the proposed insured, showing Sellers as the record title holders of
the Real Estate and the Second Parcel (as defined below), subject only
to (i) the Permitted Exceptions as set forth on Exhibit C attached
hereto, and (ii) such other items which are satisfactory to Purchaser
in its sole discretion or which can be satisfied at Closing (as defined
below) from the Closing proceeds. Pursuant to the commitment, the Title
Company shall agree to issue affirmative endorsements (a) insuring
Purchaser that there are no violations of any restrictive covenants
affecting the Real Estate and Second Parcel, (b) insuring Purchaser
that there is legal access to the Real Estate and Second Parcel, (c)
providing full extended coverage which shall result in the removal of'
(or endorsement insuring over) the general exceptions usually contained
in Schedule B of an ALTA Form B owner's title insurance policy then
issued by the Title Company, and (d) such other endorsements as may be
reasonably requested by Purchaser, at Purchaser's cost, including, but
not limited to, non-imputation, location, ALTA Zoning Endorsement 3.1
(including parking lots and loading docks, if any), contiguity (of the
Real Estate, and a special endorsement that the bills for real estate
taxes do not include taxes pertaining to any other real estate.
(ii) A current plat of survey of the Real Estate,
made by a surveyor registered in Kentucky, certified in favor of the
party to be insured and the Title Company, and made in accordance with
the American Land Title Association Survey Standards (or other
customary state standards) so as to induce the Title Company to remove
without subsequent addition any exception as to matters which would be
disclosed by an accurate and complete survey or inspection of the Real
Estate. Each such survey shall, in addition, accurately locate all
improvements, building lines, parking areas, curb cuts, any
encroachments of the improvements on the Real Estate over easements,
setback lines or onto adjoining properties, or encroachments of the
improvements on adjoining properties onto the Real Estate, recorded
easements, lines and rights of way, all roadways, include a metes and
bounds
-3-
<PAGE>
description, shall state the calculation of the square footage and the
acreage thereof shall state whether the Real Estate is located in an
area designated by an agency of the United States as being subject to
flood hazards or risks, and shall locate all storm sewers, sanitary
sewers, water lines and other utility lines located upon the Real
Estate and the service lines thereof from their respective main lines.
(iii) Copies of all documents relating to title
exceptions referred to in such title commitment and copies of all
existing and proposed easements, covenants, restrictions, agreements or
other documents which affect the Real Estate and Second Parcel and
which are not disclosed by the title commitment.
B. If (i) the commitment for an owner's title insurance policy
or the other items delivered pursuant to Section 4(a) above or the Title Policy
that the Title Company is prepared to deliver at Closing disclose exceptions to
title other than (a) the Permitted Exceptions, or (b) items which are
satisfactory to Purchaser or which can be satisfied at Closing from the Closing
proceeds, or (ii) the survey which Sellers delivers to Purchaser pursuant to
Section 4(a) above discloses any violation of any recorded restriction or any
encroachment by any Improvements onto any easement affecting the Real Estate or
onto any land adjoining the Real Estate or any encroachment of improvements from
any adjoining land onto the Real Estate, then Sellers shall have thirty (30)
days from the date of delivery of such title commitment (or seven (7) days from
the date on which the Title Company is prepared to deliver its Title Policy to
Purchaser, as the case may be) in which to have such unpermitted title
exceptions removed or cured to Purchaser's satisfaction, or thirty (30) days
from the date of delivery of the survey, in which to have any such defects
removed or cured to Purchaser's satisfaction. If such unpermitted title
exceptions or other defects are not removed or cured within the permitted time,
Purchaser may elect, upon written notice delivered to Sellers within ten (10)
days after the expiration of the permitted time, to (x) terminate this
Agreement, in which case all obligations of Purchaser hereunder shall be
extinguished, (y) extend the permitted time in which such title exceptions or
other defects may be removed or cured to Purchaser's satisfaction or (z) take
title as it then is and deduct from the Purchase Price such amounts as will
discharge or cure any title exceptions or other defects that may be discharged
or cured by the payment of a definite or ascertainable amount of money.
C. Sellers shall pay all costs incurred in obtaining the
survey, and all title insurance charges and transfer costs (including, without
limitation, transfer stamps, costs of Closing in escrow and the costs of a title
policy) shall be divided according to local custom.
-4-
<PAGE>
5. CLOSING.
A. All deposits and payments required under this Agreement
shall be made through an escrow ("Closing Escrow") established with either the
Title Company or another party satisfactory to Sellers and Purchaser
("Escrowee"), in the usual form of deed and money escrow in use by the Escrowee,
modified to conform to the terms and conditions of this Agreement. If there is
any inconsistency between this Agreement and the Closing Escrow instructions,
this Agreement shall govern and control. All costs of the Closing Escrow shall
be shared equally by Purchaser and Sellers.
B. Subject to the fulfillment of all the terms and conditions
of this Agreement, the closing ("Closing") shall take place substantially
simultaneously with the consummation of the transactions contemplated by the
Merger Agreement and the APA, which currently contemplates no earlier than ten
(10) days after all conditions precedent in the Merger Agreement have been
satisfied, but no later than sixty (60) days after the date hereof at 9:00 A.M.
(the "Closing Date") at the law offices of the Sellers' counsel in Paducah,
Kentucky, or otherwise, on such other date or place as the parties hereto may
mutually agree.
C. Sellers will deliver at Closing the following documents, in
form and substance satisfactory to Purchaser:
(i) A duly executed and acknowledged warranty deed,
in proper recordable form, conveying to Purchaser or its nominee good
and marketable title in fee simple to the Land, the Improvements, and
any fixtures thereon, subject only to the Permitted Exceptions.
(ii) A warranty bill of sale, duly executed and
acknowledged by Sellers, conveying to Purchaser title to the Personal
Property, free and clear of all Encumbrances of any nature whatsoever.
(iii) Original counterparts of all service, operating
and maintenance contracts and similar agreements being assigned to
Purchaser and an assignment thereof by Sellers to Purchaser.
(iv) An affidavit of title in customary form,
covering the Land and Improvements and Personal Property.
(v) Such other documents or instruments required by
the Title Company in order to issue the Title Policy or as reasonably
required by Purchaser.
D. Purchaser will deliver at Closing, the Purchase Price, plus
or minus prorations, and such other documents or instruments required by the
Title Company in order to issue the Title Policy or as reasonably required by
Sellers.
-5-
<PAGE>
E. Sellers and Purchaser will jointly deliver the following
documents at Closing:
(i) Real Estate Transfer Declarations.
(ii) Agreed proration statements.
F. All recording fees, transfer taxes and other closing costs
and expenses incurred in connection with the transaction contemplated hereby
which are customarily borne by sellers in the Paducah, Kentucky, metropolitan
area shall be paid by Sellers and all costs and expenses which are customarily
borne by purchasers in the Paducah, Kentucky, metropolitan area shall be borne
by Purchaser.
6. ADJUSTMENTS. Adjustments to the Purchase Price shall be made between
Sellers and Purchaser for the following items, prorated on a per diem basis as
of the date of Closing:
A. Real estate, personal property and other state or city
taxes, charges and assessments affecting the Real Estate not yet due and
payable, on the basis of the fiscal year for which the same are levied or
assessed. If the amount of any such taxes, charges or assessments shall not be
fixed before the Closing Date, the adjustment thereof at the Closing shall be
upon the basis of one hundred ten percent (110%) of the rate for the preceding
fiscal year, applied to the latest assessed valuation and state multiplier.
Immediately upon receipt of the actual bill for such tax, charge or assessment,
Purchaser and Sellers shall reprorate such tax, charge or assessment, and any
amounts due as a result of such reproration shall be promptly paid.
B. Charges under existing service contracts, if any assigned
to Purchaser by Sellers.
C. To the extent not applicable, charges for water,
electricity, sewer rental, gas, telephone, and other utilities for the Real
Estate will be paid by Sellers on a per diem basis on the basis of the most
recent available bills (subject to readjustment on receipt of bills covering the
period in which Closing occurs). Sellers shall use its best efforts to procure
final meter readings of such utilities as of the date of Closing and to have
such bills sent directly to Purchaser. Sellers will deliver to Purchaser copies
of any such bills sent to Sellers within five (5) days of Sellers' receipt
thereof.
Notwithstanding the foregoing, Sellers shall pay all of the foregoing
costs and expenses for the period during which the Companies occupy the Real
Estate.
-6-
<PAGE>
7. COVENANTS OF SELLERS.
A. During reasonable business hours between the date hereof
and Closing, Purchaser, its agents, representatives and employees may inspect
the Real Estate and its various systems.
B. Between the date hereof and Closing, Sellers:
(i) Shall maintain the Real Estate in its present
condition and from time to time shall make all necessary repairs,
renewals, replacements, additions and improvements necessary to keep
the Real Estate in its present condition, ordinary wear and tear
excepted.
(ii) Shall not, without Purchaser's prior written
consent, modify, amend or terminate any of the contracts or agreements
providing for the operation of the Real Estate.
(iii) Shall not, without Purchaser's prior written
consent, enter into any contract or agreement pertaining to the Real
Estate which involves expenditures payable after Closing in an
aggregate amount in excess of One Thousand Dollars ($1,000.00) in any
year which, in the judgment of Purchaser's attorneys, cannot be
terminated without penalty after Closing upon not more than thirty (30)
days notice, without penalty.
(iv) Shall not convey or remove from the Real Estate
any of the Personal Property, unless such property is replaced in the
same or better condition as prior to its removal, or is replaced with
other property substantially similar with respect to quality, function
and condition.
(v) Upon receipt of notice, shall remedy all
violations of laws, ordinances, orders or other requirements of any
governmental authority having jurisdiction over all or any part of the
Real Estate.
C. After the Closing, Sellers shall allow Purchaser to
discharge waste water on the real property contiguous to the Real Estate and
described on Exhibit D hereto (the "Second Parcel") pursuant to the Agreement
attached as Exhibit D1, and will cooperate with Purchaser in Purchaser's efforts
to obtain all licenses, permits or similar consents to permit such discharges
which Purchaser deems appropriate or necessary, and shall further execute and
deliver, in a recordable form, all easements or other land use entitlements
necessary to permit such discharge and give third parties notice of such
discharge agreement. In addition, Sellers shall, and hereby do, grant to
Purchaser a right of first refusal for the Second Parcel, on the terms and
conditions set forth in Exhibit D2.
-7-
<PAGE>
8. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
A. Each Seller represents and warrants to, and covenants and
agrees with, Purchaser, now and as of the Closing Date, as follows:
(i) Neither has received notice of any federal, state
or local environmental or building code violations which have not been
heretofore corrected, and neither knows of any such violation.
(ii) Neither has received notice from any insurance
company of any defects or inadequacies in the Real Estate or any part
thereof which would adversely affect the insurability of the Real
Estate.
(iii) The Real Estate is and has been operated and
maintained in strict compliance with all applicable Environmental Laws
(as defined below) and there are no Hazardous Materials (as defined
below) located in, on, under or around the Real Estate in violation of
applicable Environmental Laws.
(iv) Neither has received, and neither knows of any
previous or current owner or operator of the Real Estate receiving, any
summons, citation, directive, information inquiry or request, notice of
potential responsibility, notice of violation or deficiency, order,
Claim (as defined below), complaint, investigation, judgment, letter,
notice of environmental lien or response action in progress, or other
communication, written or oral, actual or threatened, from the United
States Environmental Protection Agency, or other federal, state or
local agency or authority, or any other entity or individual,
concerning, with regard to: (A) any intentional or unintentional act or
omission which has resulted or may result in the Release of a Hazardous
Material in violation of applicable Environmental Laws, on or off the
Real Estate; (B) the imposition of any lien on the Real Estate; or (C)
any alleged violation of or responsibility under any Environmental
Laws.
(v) Except as set forth on Exhibit E, no permits are
held or are required to be held nor are any registrations or notices
required to be made with respect to the Real Estate under the
Environmental Laws.
(vi) Only de minimus amounts of Hazardous Materials
are being Managed (as defined below) or have been Managed in, on or
about the Real Estate, all in strict compliance with applicable
Environmental Laws.
(vii) Neither has Released or caused to be Released
or allowed their agents to Release, and neither has knowledge of any
Release by any third party, of any Hazardous Materials in, on, or about
the Real Estate.
-8-
<PAGE>
(viii) There are no on-site containment, storage,
treatment, or disposal facilities for Hazardous Materials, including
without limitation underground storage tanks, sumps, fill and disposal
areas, impoundments, and subsurface structures.
(ix) The business currently conducted on the Real
Estate, or as presently contemplated to be expanded (which expansion
may include doubling the current capacity and production on the Real
Estate, and expanding to three shifts) does not, and will not,
constitute a "nuisance" of any nature whatsoever, as such term is
generally defined under Kentucky laws.
(x) EACH SELLER AGREES AND ACKNOWLEDGES THAI IN
ADDITION TO ALL OF THE REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS CONTAINED HEREIN, ALL REPRESENTATIONS, WARRANTIES, COVENANTS
AND AGREEMENTS OF THE SELLING PARTIES IN THE MERGER AGREEMENT AND THE
APA ARE HEREBY INCORPORATED HEREIN AND DEEMED REMADE BY EACH SELLER FOR
PURPOSES OF, AMONG OTHER THINGS, INDUCING PURCHASER TO ENTER INTO, AND
CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY, THIS AGREEMENT.
B. If either Seller receives notice or knowledge of any matter
which would affect the representations, warranties, covenants or agreements made
herein, Sellers agrees to immediately notify Purchaser in writing. For purposes
hereof, notice or knowledge of one Seller shall be deemed to be notice or
knowledge of both Sellers.
C. The continued validity in all material respects of the
representations and warranties set forth in Section 8A above shall be a
condition precedent to Purchaser's obligation to close the transactions
contemplated hereby. In the event that, at any time prior to Closing, any of
such representations and/or warranties of Sellers are no longer true, Sellers
shall immediately notify Purchaser in writing, specifying the factors rendering
or likely to render such representations and/or warranties invalid.
D. For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Claim" shall mean any demand, cause of action,
proceeding, or suit for damages (actual or punitive), injuries to
person or property, damages to natural resources, fines, penalties,
interest, or losses, or for the costs of site investigations,
feasibility studies, information requests, health assessments,
contribution, settlement, or actions to correct, remove, remediate,
respond to, clean up, prevent, mitigate, monitor, evaluate, assess, or
abate the release of a Hazardous Material, or to enforce insurance,
-9-
<PAGE>
contribution, or indemnification agreements being made pursuant to a
claimed violation under any Environmental Law.
(ii) "Environmental Law" shall mean and include all
federal, state and local statutes, ordinances, regulations and rules
relating to environmental quality, health, safety, contamination and
clean-up, including, without limitation, the Clean Air Act, 42 U.S.C.
Section 7401 et seq.; the Clean Water Act, 33 U.S.C. Section 12:51: et
seq., and the Water Quality Act of 1987; the Federal Insecticide,
Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. Section 136 et seq.;
the Marine Protection, Research, and Sanctuaries Act, 33 U.S.C. Section
1401 et seq.; the National Environmental Policy Act, 42 U.S.C. Section
4321 et seq.; the Noise Control Act, 42 U.S.C. Section 4901 et seq.;
the Occupational Safety and Health Act, 29 U.S.C. Section 6"51" et
seq.; the Resource Conservation and Recovery Act ("RCRA"), 42 U.S.C.
Section 6901 et seq., as amended by the Hazardous and Solid Waste
Amendments of 1984; the Safe Drinking Water Act, 42 U.S.C. Section 300f
et seq.; the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et seq., as amended by
the Superfund Amendments and Reauthorization Act, the Emergency
Planning and Community Right-to-Know Act, and Radon Gas and Indoor Air
Quality Research Act; the Toxic Substances Control Act ("TSCA"), 15
U.S.C. Section 2601 et seq.; the Atomic Energy Act, 42 U.S.C. Section
201l et seq., and the Nuclear Waste Policy Act of 1982, 42 U.S.C.
Section 10101 et seq.; and any state law regulating, relating to or
imposing liability or standards of conduct concerning any Hazardous
Materials or the environment. Environmental Laws shall also include all
state, regional, county, municipal, and other local laws, regulations,
and ordinances insofar as they are equivalent or similar to the federal
and state laws recited above or purport to regulate Hazardous
Materials.
(iii) "Hazardous Materials" shall mean any hazardous
substance, pollutant, contaminant, or waste regulated under CERCLA;
asbestos and asbestos-containing materials; oil and petroleum products
and natural gas, natural gas liquids, liquefied natural gas, and
synthetic gas useable for fuel; pesticides regulated under FIFRA; PCBs
and other substance.; regulated under TSCA; source material, special
nuclear material, byproduct materials, and any other radioactive
materials or radioactive wastes however produced, regulated under the
Atomic Energy Act or the Nuclear Waste Policy Act; chemicals subject to
the OSHA Hazard Communication Standard, 29 C.F.R. ss. 1910.1200 et
seq.; and industrial process and pollution control standards whether or
not hazardous within the meaning of RCRA.
(iv) "Manage" means to generate, manufacture,
process, treat, store, use, re- use, refine, recycle, reclaim, blend or
burn for energy
-10-
recovery, incinerate, accumulate speculatively, transport, transfer,
dispose of, or abandon Hazardous Materials.
(v) "Release" or "Released" shall mean any actual or
threatened spilling, leaking, pumping, pouring, emitting, emptying,
discharging, injection, escaping, leaching, dumping, or disposing of
Hazardous Materials into the environment, as "environment" is defined
in CERCLA.
9. BROKER. Each Seller represents and warrants that Sellers, and not
the Companies, shall be solely responsible for payment of and shall pay, when
due, any and all brokerage commissions and fees payable to or earned by (a) The
March Group, LLC (the "Broker"), or (b) any other party, in connection with this
Agreement or the Merger Agreement and arising from any agreement therefor
written or oral, to which either Seller is a party, or otherwise arising by,
through or under Sellers.
10. DESTRUCTION OR DAMAGE.
A. Sellers shall bear all risk of loss or damage to the Real
Estate until Closing. If, prior to Closing, the Improvements or any portion
thereof shall be destroyed or damaged by one or more incidents of vandalism,
fire and/or other casualty, whether or not covered by insurance, requiring
aggregate expenditures of more than $50,000 (including insurance proceeds) to
repair, replace or restore the same to their condition prior to such fire or
other casualty (as determined by an insurance adjustor selected by Purchaser and
reasonably acceptable to Sellers), Purchaser shall have the right, exercisable
upon written notice delivered to Sellers not more than thirty (30) days
following such destruction or damage, to terminate this Agreement. If one or
more incidents of vandalism, fire or other casualty cause loss or damage to the
Improvements (1) in an amount less than $25,000 or (2) in an amount greater than
$50,000, determined as aforesaid, and if Purchaser does not elect to terminate
this Agreement as aforesaid, then Purchaser may, at its option, either (a) defer
Closing until the Improvements are repaired, replaced or restored to
substantially the condition existing immediately prior to such loss or damage,
in which case Sellers shall forthwith undertake and diligently complete such
repair, replacement and/or restoration, or (b) close the transaction
contemplated hereby on the date scheduled for Closing, in which case there shall
be, at Purchaser's and Sellers' option: (i) deducted from the Purchase Price an
amount necessary to restore the Real Estate to its condition before such
casualty, or (ii) Sellers shall assign or pay to Purchaser at Closing all
insurance proceeds (and other related choses in action, if any) collected or
claimed with respect to said loss or damage and pay to Purchaser at Closing the
amount of any applicable deductible from such insurance.
B. Sellers shall maintain in full force and effect until
Closing fire and extended coverage insurance insuring the Improvements for their
full
-11-
<PAGE>
replacement cost. The limits of such coverage shall be no less than the
full Purchase Price.
11. CONDEMNATION. In the event that between the date hereof and the
Closing Date, any condemnation or eminent domain proceedings are initiated which
might result in the taking of all or any portion of the Land or the
Improvements, Purchaser may elect within ten (10) days after receipt of notice
from Sellers to:
A. Terminate this Agreement, in which event all rights and
obligations of the parties hereunder shall cease and the Earnest Money shall be
returned to Purchaser; or
B. Consummate this transaction, in which event Sellers shall
assign to Purchaser all of Sellers' right, title and interest in and to any
award made in connection with such condemnation or eminent domain proceedings.
12. INDEMNIFICATION. EACH OF THE TERMS AND CONDITIONS CONTAINED IN
SECTION 13 OF THE MERGER AGREEMENT IS HEREBY INCORPORATED HEREIN AS THOUGH FULLY
SET FORTH HEREIN, AND ALL OF THE INDEMNIFICATION DUTIES AND OBLIGATIONS OF THE
SELLING PARTIES THEREIN ARE HEREBY DEEMED TO BE THE JOINT AND SEVERAL DUTIES AND
OBLIGATIONS OF EACH SELLER HEREIN. FURTHERMORE, SELLERS AGREE AND ACKNOWLEDGE
THAT THE INDEMNIFICATION PROCESS AND PROCEDURES SET FORTH IN SECTIONS 13C-F,
INCLUSIVE (INCLUDING RIGHTS OF SET-OFF), SHALL BE THE INDEMNIFICATION PROCESS
AND PROCEDURES WHICH GOVERN SELLERS' JOINT AND SEVERAL INDEMNIFICATION
OBLIGATIONS HEREIN.
EACH SELLER AGREES AND ACKNOWLEDGES THAT ANY MATTER GIVING RISE TO
INDEMNIFICATION HEREUNDER SHALL GIVE RISE TO INDEMNIFICATION UNDER THE MERGER
AGREEMENT, IT BEING THE PARTIES' INTENT TO "CROSS-DEFAULT" BREACHES AND DEFAULTS
HEREUNDER WITH THE MERGER AGREEMENT.
NONE OF THE FOREGOING REMEDIES SHALL BE MUTUALLY EXCLUSIVE.
13. SURVIVAL OF REPRESENTATIONS. WARRANTIES. AGREEMENTS AND
COVENANTS.
A. All representations, warranties, agreements and covenants
made by any party hereto in this Agreement shall survive the Closing of the
transactions hereunder.
-12-
<PAGE>
B. The representations and warranties hereunder shall not be
affected or diminished by any investigation at any time by or on behalf of the
party for whose benefit such representations, warranties, covenants and
agreements were made, or the fact that such representations, warranties,
agreements and covenants were made to such party's knowledge.
14. EXCHANGE. It is Sellers' intention to exchange the Real Estate for
real. property of like-kind ("Exchange Property") under such terms and
conditions that qualify' for non-recognition of gain pursuant to Section 1031 of
the Code. Accordingly, Purchaser's obligations for payment of the cash balance
due to Sellers for the Real Estate under this Agreement shall, at Sellers'
election, be fulfilled as provided herein and in the Trust Agreement
(hereinafter defined), if a non-simultaneous exchange is elected. If a
non-simultaneous exchange is elected, Sellers shall designate the Exchange
Property within the time period as presently provided by law which shall be on
or before 45 days after the date the Real Estate is transferred to Purchaser
(the "Closing Date"). Notwithstanding any other provision of this Agreement to
the contrary, the following conditions contained herein are agreed and
understood by Sellers and Purchaser:
A. After notification to Purchaser of Sellers' election to
effect a like-kind exchange and, if a non-simultaneous exchange is elected, on
or prior to the Closing Date, Sellers and Purchaser shall execute a Like-kind
Exchange Trust Agreement ("Trust Agreement") with a trustee designated by
Sellers (the "Trustee"), on its standard form in order to facilitate the
accomplishment of a non-simultaneous, like- kind exchange ("Non-Simultaneous
Exchange") under Section 1031 of the Code. Thereafter, the Non- Simultaneous
Exchange shall be conducted pursuant to the terms and conditions of the Trust
Agreement.
B. Purchaser agrees to cooperate with Sellers to effectuate
the Exchange contemplated hereunder and to execute and deliver any and all
documents which reasonably may be required to effectuate the Exchange as a
qualified transaction pursuant to Section 1031 of the Code; provided that
Purchaser incurs no additional cost or liability or is required to take title to
the Exchange Property ii' connection with the Exchange. Sellers shall indemnify'
and hold Purchaser harmless from any and all claims, costs, expenses,
liabilities or losses arisen by reason of this Section and by reason of the
cooperation of Purchaser with Sellers in connection with the entry into and the
performance under the Trust Agreement.
C. The Exchange Property or Properties which shall be acquired
by the Trustee shall be transferred to Sellers in exchange for the Property as
provided for in the Trust Agreement.
D. With respect to the acquisition of Exchange Property by
Trustee, the following requirements shall be observed:
-13-
<PAGE>
(i) The contract for purchase of the Exchange
Property shall be executed by the Trustee or shall be assigned to the
Trustee;
(ii) Purchaser shall not be required to incur any
cost or spend or advance any sums of money in excess of that which
Purchaser otherwise would have been required to incur or expend in
connection with the purchase of the Real Estate had Sellers not elected
the Non-Simultaneous Exchange; any such excess sums of money shall be
the responsibility of and provided by Sellers, and shall be paid by
Sellers in accordance with the provisions of the Trust Agreement.
Without limitation, the indemnity provision hereof, shall survive the
Closing Date and the termination of the Trust Agreement and shall be binding
upon the successors and assigns of Sellers.
15. MISCELLANEOUS.
A. Manner of Closing. At the Closing, all transactions shall
be conducted substantially concurrently and no transaction shall be deemed to be
completed until all are completed.
B. Access to Records. Purchaser shall afford to Sellers and
their agents, the opportunity, upon reasonable advance notice, to examine and
make copies of the books and records of the Companies having an effect on all
periods prior to the Closing Date, in connection with tax and financial
reporting matters and other bona fide business purposes, and Purchaser shall use
reasonable efforts to retain such books and records for a period of four (4)
years from the date of such books and records.
C. Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the parties and their respective
executors, successors and assigns. Furthermore, should either Seller already
have, or in the future create, a trust for his/her benefit or the benefit of any
family member, then such Seller's signature below will constitute and, if
necessary, such trust will execute, at no additional cost, such instruments as
are necessary to evidence, such trust being jointly and severally liable for
Sellers' obligations hereunder. By each Seller's execution hereof he/she hereby
acknowledges that any trust to which he/she has transferred, or in the future
transfers, assets with the intent, purpose or effect of estate planning purposes
or to avoid liability hereunder or of which he/she is the trustee or is a
beneficiary, shall be jointly and severally liable for all of his/her
obligations hereunder, without the necessity for further action on any party's
behalf. Notwithstanding the foregoing, each Seller is prohibited from assigning
his/her interests hereunder, by operation of law or otherwise. Each Seller
hereby consents to a collateral assignment of Purchaser's rights hereunder to a
lender, understanding that such lender shall have the ability to enforce the
rights of Purchaser granted herein.
-14-
<PAGE>
D. Entire Agreement Amendments. This Agreement, the Exhibits
attached hereto, and the other writings referred to herein or delivered in
connection herewith contain the entire understanding of the parties with respect
to its subject matter, and supersedes all prior understandings and agreements.
This Agreement may be amended only by a written instrument duly executed by the
parties. Any reference herein to this Agreement shall be deemed to include the
Exhibits attached hereto. If any provision of this Agreement is determined to be
illegal or unenforceable, such provision will be deemed amended to the extent
necessary to conform to applicable law or, if it cannot be so amended without
materially altering the intention of the parties, it will be deemed stricken and
the remainder of the Agreement will remain in full force and effect.
E. Headlines. The section and subsection headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
F. Notices. All notices, claims, certificates, requests,
demands and other communications ("communications") hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
mailed (by registered or certified mail, postage prepaid) or sent by overnight
courier service or facsimile addressed as follows:
If to either Seller, in care of
Mr. Grogan, at: Route #2
Arlington, KY 42021
With a copy to: Gary B. Houston, Esq.
WHITLOW ROBERTS HOUSTON & STRAUB
Old National Bank Building
300 Broadway
Paducah, KY 42002-0995
Facsimile: (502)443-4571
If to Purchaser: c/o Sterling Capital, Ltd.
650 Dundee Road, Suite 370
Northbrook, IL 60062
Facsimile: (847)480-0199
With a copy to: Tom D. Wippman, P.C.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Facsimile: (847)480-0199
-15-
<PAGE>
or to such other address as the person to whom a communication is to be given
may have furnished to the others in writing in accordance herewith. A
communication given by any other means shall be deemed duly given on the earlier
of when actually received by the addressee or three (3) days after sending such
communication. Notice hereunder to one Seller shall be deemed to be notice to
the other Seller and also notice to the Selling Parties under the Merger
Agreement.
G. Public Announcements. All public announcements relating to
this Agreement or the transactions contemplated hereby, including announcements
to employees, will be made only as may be agreed upon jointly by the parties
hereto, or as Purchaser considers required or appropriate to comply with
applicable law. Any governmental, public or private inquiries or requests for
information shall be promptly referred to Purchaser.
H. Further Assurances. After the Closing Date, without further
consideration, the parties shall execute and deliver such further instruments
and documents as either party shall reasonably request to consummate the
transactions contemplated hereby.
I. Waivers. Any party to this Agreement may, by written notice
to the other party hereto, waive any provision of this Agreement. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent, same or different breach.
J. Materiality and Knowledge. The terms "material" or
"materially" or "materiality" shall mean either (i) the existence of a fact or
condition or facts or conditions which, if a dollar amount is readily
ascertainable with respect to such, has a value, either individually or in the
aggregate, of more than $10,000.00, or (ii) the determination by a lender, in
such lender's sole and absolute discretion, that such fact or condition is, or,
if known to such lender would be, material for purposes of its making a loan to
Purchaser in order to consummate the transactions hereunder or to avoid any
acceleration of such loan, or (iii) any fact or condition which gives rise to
any right of termination, cancellation, acceleration or modification of any
agreement or understanding to which either of Sellers is a party and such right
has been exercised. The term "knowledge" shall mean (i) actual knowledge or
notice, (ii) that knowledge which a party should know after having made all
reasonable inquiries and (iii) that an individual or individuals making a
statement as to its, his or her "knowledge" has made all reasonable inquiries
regarding the facts and circumstances relating to such statement. For purposes
of this Agreement, the knowledge of any of the Selling Parties under the Merger
Agreement shall be deemed to be the knowledge of the Sellers hereunder (i.e.,
the knowledge of one of the Selling Parties shall be imputed to both Sellers),
and vice versa, and the receipt of a notice by any shall be deemed to be receipt
by all.
-16-
<PAGE>
K. Counterparts. The Agreement may be executed in one or more
counterparts, but all such counterparts shall constitute one and the same
instrument.
L. Certificate. A Certificate shall mean a certificate signed
by the individual stating that (i) such individual who is signing the
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the individual's knowledge, after due
inquiry, such certificate does not misstate any material fact and does not omit
any fact necessary to make the certificate not misleading.
M. Person Defined. The term "Person" shall mean an individual,
a partnership, a joint venture, a joint stock company, a corporation, a trust,
an unincorporated organization, a limited liability company, any other legal
entity and a government, governmental body or quasi-governmental body, or any
department, agency or political subdivision thereof.
N. Applicable Law. The terms and conditions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
Kentucky applicable to agreements between Kentucky residents entered into and to
be performed entirely within Kentucky.
O. Consent to Jurisdiction. For those matters or disputes of
any nature arising out of, connected with, related or incidental to a party
seeking to compel action (other than payment) or cease a prohibited action, the
parties hereto hereby irrevocably submit themselves to the exclusive
jurisdiction of the courts of the State of Kentucky located in the City of
Paducah, Kentucky and to the jurisdiction of the United States District Court
for the Western District of Kentucky for the purpose of bringing any action that
may be brought in connection with the provisions hereof. The parties hereto
hereby individually agree that they shall not assert any claim that they are not
subject to the exclusive jurisdiction of such courts, that the venue is
improper, that the forum is inconvenient or any similar objection, claim or
argument. Service of process on any of the parties hereto with regard to any
such action may be made by mailing the process to such Persons by regular or
certified mail to the address of such Person set forth herein or to any
subsequent address to which notices shall be sent.
P. Agreement to Arbitrate. Except for those matters described
in Section 15O above, in the event of any other dispute arising out of,
connected with, related or incidental to this Agreement and the documents or
instruments delivered in connection herewith, such dispute shall be submitted to
arbitration in accordance with the terms of this Section. The party who is
alleging that a dispute exists shall send a notice of such dispute to all other
parties, which notice shall set forth in detail the dispute, the parties
involved and the position of such party with respect
-17-
<PAGE>
thereto. Within ten (10) business days after the delivery of such a notice,
counsel for the parties shall deliver a joint request to the Managing Partner of
the Cincinnati, Ohio Office of Strauss & Troy, Esq., requesting such person to
deliver a list often (10) prospective arbitrators, all of whom such partner
believes to be experienced in commercial arbitration, along with a brief resume
of each such person. The parties shall do all things necessary to reasonably
cooperate in the selection of the ten (10) persons, including holding Strauss &
Troy harmless from any and all claims arising out of such selection and
arbitration. If such Managing Partner declines, the list often (10) shall be
selected by the party asking for arbitration receiving a list from any private
dispute resolution firm with offices in Cincinnati. The arbitrator shall be
selected as follows: within three (3) days after the list is delivered to each
party, each party shall assign rank of preference to each available arbitrator,
with number one being the most preferable and ten being the least preferable
(i.e., a different rank must be assigned to each available arbitrator) and
deliver such rankings confidentially to the person or firm which created the
list; in the event of a tie, the person or firm which created the list shall
then select the arbitrator from the two potential arbitrators which have tied.
The single arbitrator with the lowest total score shall be the arbitrator for
the dispute. The arbitrator so selected shall schedule a hearing in Paducah,
Kentucky, on the disputed issues within forty-five (45) days after his
appointment, and the arbitrator shall render his decision after the hearing, in
writing, as expeditiously as is possible, and shall be delivered to the parties.
The arbitrator shall render his decision based on written materials supplied by
the parties to the arbitration in support of their respective oral presentations
at the hearing, and no party shall be entitled to discovery in such matter. Each
party shall supply a copy of any written materials to be submitted to the
arbitrator at least fifteen (15) days prior to the scheduled hearing. The
parties agree that the arbitrator shall not have any power or authority to award
punitive damages. A default judgment may be entered against any party who fails
to appear at the arbitration hearing. Such decision and determination shall be
final and unappealable and shall be filed as a judgment of record in any
jurisdiction designated by the successful party. The successful party shall be
entitled to recover all fees, costs and expenses incurred in connection with
such arbitration. The parties hereto agree that this paragraph has been included
to rapidly and inexpensively resolve any disputes between them with respect to
the matters described above, and that this paragraph shall be grounds for
dismissal of any court action commenced by any party with respect to a dispute
arising out of such matters.
THE PARTIES AGREE THAT ANY ARBITRATION SHALL BE GOVERNED BY AND PURSUANT TO THE
FEDERAL ARBITRATION ACT, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
Q. Exceptions to Exclusive Jurisdiction and Mandatory
Arbitration. Notwithstanding the provisions of Sections 15O and 15P hereof in
the event that there is a third party action which may give rise to rights of
indemnification or
-18-
<PAGE>
contribution from one party(ies) to another, the parties
hereto irrevocably submit themselves to the jurisdiction of the court in which
such third party action is brought, and the party to be indemnified may, but
shall not be obligated to, bring a third party action or other appropriate
proceeding to enforce such rights of indemnification or contribution. The
foregoing is not intended to confer any rights upon any other party other than
the parties hereto.
R. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, singular and plural as the identity
of that person referred to requires.
S. Joint and Several Obligations. The duties and obligations
of each Seller are joint and several, and Sellers hereby acknowledge the same,
and each Seller hereby guarantees performance of all duties and obligations of
the other under and pursuant to this Agreement. Furthermore, where there is
imposed an obligation or duty upon one Seller, the other Seller shall be jointly
and severally liable for ensuring the prompt compliance of such obligation or
duty thereof.
T. Effect of Disputes. Notwithstanding the fact that there may
from time to time be disputes among the parties concerning the terms and
conditions hereof the parties agree not to under any circumstances, disparage,
criticize or denigrate the talents, skills, prospects, abilities, integrity or
character of the other parties hereto, or such parties' management, directors,
employees, agents or representatives (including those of Purchaser's
affiliates). Each Seller further agrees that he/she will not, at any time after
the date hereof and without Purchaser's written consent, contact any' past,
present or prospective customer, supplier, employee or agent or representative
of either of the Companies or Purchaser with the intent, purpose or effect of
injuring the reputation, business or business relationships of Purchaser. The
provisions of this Section shall survive the execution and termination hereof,
irrespective of the reason for such termination.
U. Mutual Drafting. This Agreement is the joint product of
Purchaser and Sellers and their respective counsel, and each provision hereof
has been subject to the mutual consultation, negotiation and agreement of such
parties and counsel, and shall not be construed for or against any party hereto.
V. Time. Time is of the essence of this Agreement.
(end of text)
********************************
-19-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
GROGAN'S MERGER CORP.
By_____________________________
Merrick M. Elfman, Chairman
_______________________________
Bobby L. Grogan
_______________________________
Betty R. Grogan
-20-
<PAGE>
EXHIBIT 2.16
<PAGE>
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "AGREEMENT"), dated as of the 1st day
of October, 1996, by and between GROGAN'S MERGER CORP., a Delaware corporation
(the "COMPANY") and BOBBY L. GROGAN ("GROGAN"), whose principal residence is
Route #2, Arlington, KY 42021.
WITNESSETH:
WHEREAS, the Company is engaged in the business (the "BUSINESS") of
manufacturing, distributing, marketing and selling prepared food products and
related products and services; and
WHEREAS, Grogan is skilled and experienced in the Business; and
WHEREAS, the Company desires to employ Grogan and recognizes that
certain inducements must be offered to Grogan in order for the Company to retain
Grogan's services; and
WHEREAS, Grogan and the Company are desirous of entering into an
agreement providing for the employment by the Company of Grogan upon the terms
provided herein.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, agreements and promises contained herein, the parties agree as
follows:
1. Employment. Company hereby employs Grogan and Grogan hereby accepts
employment by the Company. Grogan may be elected or appointed a director or
officer of the Company or any subsidiary or affiliate thereof during the term
hereof but only with Grogan's prior consent.
2. Term. The term hereof shall commence on the date hereof and shall
continue until September 30,1997, unless sooner terminated in accordance with
the provisions of Section 6 hereof. The period from the date hereof to the date
of this Agreement's expiration or sooner termination shall be deemed the "TERM".
At the end of the Term, Grogan will resign from all offices and directorships.
3. Duties.
(a) Grogan agrees to perform such duties and tasks as the
Company may from time to time reasonably request, subject to the direction of
the Company's Board of Directors, Chairman and Chief Executive Officer,
including managing the sales and marketing of the Business in its current
market. Grogan further agrees to comply with all policies, obey willingly all
<PAGE>
rules, regulations and instructions of the Company, and to faithfully,
diligently and competently perform to the best of his ability all of the duties
assigned, or refrain from such activities proscribed by the Company, subject,
however, to the supervision and control of the Board of Directors of the
Company. Grogan shall devote all of his business time, energy and skill to his
duties hereunder, shall not accept employment of any kind from, perform duties
for, or render services to any person other than the Company, without the prior
written consent of the Company.
(b) Nothing herein shall preclude the Board of Directors of
the Company from changing Grogan's title and duties if such change is in the
Company's best interests; provided, however, that at all times during that part
of the Term that Grogan is employed as a fill-time employee of the Company,
Grogan shall be employed as an executive of the Company with appropriate and
commensurate compensation as provided in Section 4 below.
4. Compensation.
(a) Base Salary. During that part of the Term that Grogan is
employed as a full-time employee of the Company, the Company shall pay to Grogan
compensation equal to an annual base salary (the "BASE SALARY") at the rate of
FIFTY THOUSAND AND NO/100ths DOLLARS ($50,000.00) per annum, payable in
accordance with the Company's normal payroll periods, less normal payroll
deductions. The Company shall reimburse Grogan for all approved expenses
necessarily and reasonably incurred by Grogan in connection with the Business,
against presentation of proper receipts or other proof of expenditure, and
subject to such reasonable guidelines or limitations provided to Grogan, and
which are to be applied prospectively only as the Board of Directors of the
Company may impose.
(b) Bonuses. Grogan may receive such other bonuses or
additional compensation as the Board may approve, from time to time, in its sole
and absolute discretion.
(c) Limitations. All bonuses, if any, shall only be paid as
such may be permitted by any applicable loan documents to which the Company may
be a party or bound.
5. Benefits. During that part of the Term in which Grogan is employed
as a full-time employee of the Company, Grogan shall be entitled to participate
in any profit sharing plan, retirement plan, group life insurance plan or other
insurance plan or medical expense plan maintained by the Company for its
employees, and two (2) weeks paid vacation per year and reasonable sick leave.
Such benefits shall not be subject to execution, attachment or similar process
except as an offset to claims by the Company against Grogan or as otherwise
required by law.
-2-
<PAGE>
6. Termination.
(a) Upon the death or resignation of Grogan, this Agreement
and Grogan's and his heir's, executor's and administrator's entitlement to
compensation and other benefits and rights hereunder (other than compensation
and other benefits which shall have accrued up to the date of death or
resignation) shall automatically terminate. Notwithstanding Grogan's resignation
hereunder, Grogan will continue to be bound by the terms and conditions of
Section 8 hereof. Any resignation pursuant to this Section shall be deemed
ineffective if Grogan's termination under Section 6(c) hereof is imminent.
(b) The Company may, at its option, terminate this Agreement
upon written notice to Grogan if Grogan, because of physical or mental
incapacity or disability, fails in any material respect to perform the services
required of him hereunder or is unable to perform his duties hereunder for a
continuous period of 30 days or any 60 days out of any twelve month period. Upon
such termination, all obligations hereunder of the Company shall cease, except
for compensation and other benefits and rights hereunder which shall have
accrued up to the date of termination. If within ten (10) days of the written
notice referred to above, Grogan notifies the Company in writing that he
disputes the Company's determination of his disability, the Company and Grogan
shall, within five days of Grogan's notice, each name a physician who is a
member of the American Medical Association ("AMA"), who shall select a third
physician who is a member of AMA to examine Grogan. The decision of the third
physician shall be certified in writing to the Company and Grogan, and said
decision shall be binding and conclusive upon the Company and Grogan. If Grogan
shall fail to notify Company within the ten (10) day period herein prescribed
that he disputes the Company's determination of disability, then the Company's
determination thereof shall be final and conclusive and Grogan's employment
shall terminate. Grogan will submit to the appropriate medical examinations.
(c) The Company may, at its option, immediately terminate this
Agreement due to a material breach hereof by Grogan or for "JUST CAUSE."
Notwithstanding anything herein to the contrary, in the event of a termination
for either of such reasons, all obligations of any nature of the Company, except
for compensation which will have accrued up to the date of termination, shall
terminate. "JUST CAUSE" hereunder shall be limited to one of the following
grounds:
(i) The Company fails to reach eighty per cent (80%)
of its operating income budget over any given nine month period;
-3-
<PAGE>
(ii) Willful failure to follow customer prescribed
quality control procedures;
(iii) Any material conflict of interest, except a
material conflict of which the Company has been notified and the
Company has agreed to allow;
(iv) Employee's use of Company's proprietary
information for his own benefit or in a way adverse to Company's
interests;
(v) Employee's rendering of assistance to any
person's, organization's or entity's competitive efforts with Company;
(vi) Employee has materially breached any of the
provisions of this Agreement;
(vii) Employee's refusal, after notice thereof, to
perform specific directives of the Board of Directors which are
consistent with the scope and nature of Employee's duties and
responsibilities as set forth herein;
(viii) Dishonesty of Employee at any time directly or
indirectly and materially affecting the Company;
(ix) Habitual drunkenness or use of drugs (unless
medically prescribed) which interferes with the performance of
Employee's obligations hereunder;
(x) Employee's engagement at any time in any act of
fraud, embezzlement or Employee's admission or conviction of or plea of
nolo contendere to a felony or of any crime at any time involving moral
turpitude, fraud, or misrepresentation;
(xi) Any gross or willful misconduct of Employee at
any time resulting in loss to the Company, substantial damage to the
Company's reputation, or theft or defalcation from the Company;
(xii) Any intentional act of Employee having the
purpose or effect of materially injuring the reputation, business or
business relationships of the Company; or
(xiii) Any breach by Employee of his fiduciary duty
or duty of loyalty to the Company, or the restrictive covenants
contained in Section 8 hereof or of any policy, written or unwritten,
of the
-4-
<PAGE>
Company (e.g., prohibition of sexual harassment in the work place or
discrimination in hiring practices).
(d) In the event that the Company desires to relieve Grogan of
his employment duties hereunder for any reason other than in Sections 6(a), 6(b)
and 6(c), then, the Company may immediately terminate Grogan under this Section
by giving Grogan written notice, and by paying Grogan the Base Salary and
benefits which would otherwise be payable hereunder for the shorter of (i) the
six (6) months immediately following the delivery of such notice and (ii) the
amount of time left during the Term until the next applicable termination date.
Any benefit which would have accrued during such time period shall be deemed to
have so accrued on the appropriate date. The payments and benefits payable to
Grogan under this Section shall be Grogan's sole and exclusive remedies.
Notwithstanding such termination, Grogan will continue to be bound by the terms
and conditions of Section 8 hereof
7. Effect of Termination. Notwithstanding anything to the contrary
contained herein, should Grogan's employment with the Company be terminated for
any reason whatsoever, Grogan will no longer have an office at the Company's
places of business, and will not visit such places.
8. Restrictive Covenant. In addition to Grogan's covenants contained in
Section 12 of the Agreement and Plan of Reorganization dated as of the date
hereof among the Company, Grogan, his wife, Atlantic Beverage Company, Inc.
("ABEV"), Grogan's Farm, Inc. and Grogan's Sausage, Inc.:
(a) Nondisclosure. Grogan acknowledges that he has been and
will be entrusted with trade secrets, marketing, operating and strategic plans,
customer and supplier lists, proprietary information and other confidential or
specialized data and/or information relative to the Business of the Company and
its predecessors, whether now existing or to be developed or created after the
date hereof (collectively, "TRADE SECRETS"). Grogan covenants and agrees that he
shall at all times during the Term and thereafter hold in strictest confidence
any and all Trade Secrets that may have come or may come into his possession or
within his knowledge concerning or related to the products, services, processes,
businesses, suppliers, customers and clients of the Company or its affiliates
and their predecessors. Grogan further covenants and agrees that neither he nor
any person or enterprise controlled by him will for any reason, directly or
indirectly, for himself or for the benefit of any other person or enterprise,
use, copy, divulge or otherwise disseminate or disclose any of the Trade Secrets
owned or used by, or licensed to, Grogan or any of his affiliates or otherwise
relating to Grogan, the Company or the Business, provided that Grogan may
-5-
<PAGE>
disclose Trade Secrets pursuant to an order by a court of competent
jurisdiction, provided, further, that Grogan shall give the Company notice of
such order and any court pleading requesting such disclosure, in order to
provide the Company with an opportunity to prevent such disclosure or procure an
appropriate protective order.
(b) Customers and Trade Secrets. Grogan acknowledges that
customers and customer accounts and Trade Secrets of Grogan and the Company will
at all times be the sole and separate property of the Company, in which Grogan
has no rights whatsoever, and all activities of or work performed by Grogan for
or on behalf of the Company in the future will be performed solely for the
benefit of the Company and the goodwill resulting from such efforts by Grogan is
and at all times will be the sole and separate property of the Company, which
goodwill is intended to be protected, in part, by this Section.
(c) Non-Solicitation: Non-Hire. Grogan agrees that from the
date hereof and continuing for a period (the "NON-COMPETE PERIOD") of four (4)
years after the later of (i) the date his consulting or employment relationship
with the Company terminates or (ii) he does not own, directly or indirectly,
more than 50,000 shares of the common stock of ABEV, neither he nor any person
or enterprise controlled by him will solicit or hire or contract with, for
employment, consulting or any other reason, any person who was employed by the
Company or Grogan or any of the Company's affiliates as a manager, sales person,
officer, office head, buyer, accountant/controller or other key employee at any
time within one (1) year prior to the time of the act of solicitation, or hire.
(d) Non-Competition by Grogan. During the Non-Compete Period,
Grogan agrees that neither he nor any person or enterprise controlled by him
will become a stockholder, director, officer, agent, employee or representative
of or consultant to a corporation or member of a partnership. engage as a sole
proprietor in any business, act as a consultant to any of the foregoing or
otherwise engage, directly or indirectly, in any enterprise which competes with
the Business in any geographic area in which Grogan does business on the date
the Term ends, which area Grogan acknowledges includes the States described in
EXHIBIT A hereof; provided, however, that the foregoing shall not prohibit the
ownership of less than two percent (2%) of the outstanding shares of the stock
of any corporation engaged in any business, which shares are regularly traded on
a national securities exchange or in any over-the-counter market. The Non-
Compete Period shall be extended for that period of time during which Grogan is
in violation of the covenants contained in this Section. In consideration of the
covenants contained herein, the Company shall pay to Grogan on the first through
-6-
<PAGE>
fourth anniversaries hereof (i.e., on October 1, 1997, 1998, 1999 and 2000), a
lump sum payment equal to $25,000.
(e) Survival. The provisions of this Section shall survive the
termination of this Agreement and Grogan's employment with the Company,
irrespective of the reason therefor.
9. Relief Reformation: Severability. Grogan agrees that the covenants
herein are separate and are reasonable in their scope and duration and may be
enforced by specific performance or otherwise. Grogan shall not raise any issue
of reasonableness as a defense in any proceeding to enforce any of such
covenants. Notwithstanding the foregoing, in the event that a covenant included
herein shall be deemed by any court to be unreasonably broad in any respect, the
Court which makes such finding shall modify such covenant for the purpose of
making such covenant reasonable in scope and duration. The validity, legality or
enforceability of the remaining provisions hereof shall not be affected by any
such modification.
10. Inventions. Grogan shall and hereby assigns to the Company his
entire right, title and interest in all discoveries, processes, recipes and
improvements, patentable or otherwise, trade secrets and ideas, writings and
copyrightable material, which have been or may be conceived by Grogan or
developed or acquired by him during the term hereof and the Non-Compete Period,
which may pertain directly or indirectly to the Business. Grogan agrees to
promptly and fully disclose in writing all such developments. Grogan
acknowledges that all Trade Secrets and other ideas relating to the Business
which were conceived by Grogan before the date hereof have been assigned by
Grogan to the Company. Grogan will, upon the Company's request, execute,
acknowledge and deliver to the Company all instruments and do all other acts
which are necessary or desirable to enable the Company to file and prosecute
applications for, and to acquire, maintain and enforce all letters, patents,
trademark registrations, or copyrights or enforce all rights in any intangible
or intellectual property in all countries.
11. Remedies. Grogan acknowledges that any breach hereof by him will
cause irreparable harm to the Company, that such harm will be difficult if not
impossible to ascertain. Therefore, if any action or proceeding is commenced by
or on behalf of the Company to enforce the provisions hereof, the Company shall
be entitled to equitable relief including injunction, against any actual or
threatened breach hereof, and any damages arising therefrom including, without
limitation, reasonable fees of its attorneys and their support staff and all
other costs and expenses incurred in connection therewith without bond. Neither
the right to obtain such relief nor the obtaining of such relief shall be
exclusive of or preclude the Company from any other remedy. Grogan hereby waives
the claim or defense to an action for
-7-
<PAGE>
equitable relief by the Company that the Company has an adequate remedy at law
or has not been or is not being irreparably injured by such breach. FURTHERMORE,
EACH PARTY HEREBY WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE OF ANY NATURE ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO
THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION HEREWITH. INSTEAD ANY
DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
12. Insurance. The Company may, at its election and for its benefit,
insure Grogan against disability, accidental loss or death and Grogan shall
submit to such physical examinations and supply such information as may be
required in connection therewith.
13. Assignment. Grogan acknowledges that the services to be rendered by
him hereunder are unique and personal and that Grogan may not assign any of his
rights or delegate an)' of his duties or obligations hereunder to any other
person or entity, whether by voluntary or involuntary assignment or transfer.
This Agreement shall be binding upon and inure to the benefit of the successors
and assigns of the Company, and the heirs, executors, administrators and
personal representatives of Grogan, and shall be assignable by the Company to
any entity acquiring substantially all of the assets of the Company.
14. Notices. All notices, demands and communications required or
permitted to be given hereunder shall be sufficient if in writing and shall be
deemed to have been duly given on the date received if delivered personally or
two days after the date such notice, demand or communication is sent if sent by
first class, certified or registered mail, return receipt requested, postage
pre-paid and addressed, or one day after the date such notice, demand or
communication is sent if sent by overnight courier service to Grogan at his
residence set forth above, or to the Company at its principal place of business,
or to such other person at such location as either party hereto may subsequently
designate in a similar manner.
15. Waiver of Breach. The failure of a party at any time to require
performance by the other of any provision expressed herein shall in no way
affect such party's right thereafter to enforce such provision. Furthermore, a
waiver by a party of a breach of any provision hereof by the other party shall
not operate or be construed as a waiver of any subsequent breach by the other
party.
16. Entire Agreement; Amendments. This Agreement contains the entire
understanding of the parties with respect to its subject matter, and supersedes
all prior understandings and agreements. No party has relied on
-8-
<PAGE>
any statement of the other party except for those statements contained herein.
This Agreement may be amended only by a written instrument duly executed by the
parties. If any provision of this Agreement is determined to be illegal or
unenforceable, such provision will be deemed amended to the extent necessary to
conform to applicable law or, if it cannot be so amended without materially
altering the intention of the parties, it will be deemed stricken and the
remainder of the Agreement will remain in full force and effect.
17. No Conflicting Agreements. Grogan represents and warrants that he
is not a party to any agreement, contract or understanding, whether employment
or otherwise, which would in any way restrict or prohibit him from undertaking
or performing employment in accordance with the terms and conditions hereof
18. Expenses upon Default. If any party defaults in the performance of
any of its covenants, agreements or obligations described herein, then in
addition to any and all other rights or remedies which the non-defaulting party
may have against the defaulting party, the defaulting party will be liable to
and will pay to the non-defaulting party a sum equal to all of the
non-defaulting party's court costs and fees of its attorneys and their support
staff and all other costs and expenses associated with such dispute incurred in
enforcing the covenants, agreements or obligations of the defaulting party
described herein.
19. Offset. Any amounts which may be due and owing from Grogan to the
Company arising from or pursuant to any agreement whatsoever, shall be paid to
the Company on demand therefore, and if not so paid, such amounts may be
deducted from any amounts which the Company may owe to Grogan.
20. Applicable Law. The terms and conditions of this Agreement shall be
governed by and construed in accordance with the laws of the State of Kentucky
applicable to agreements between Kentucky residents entered into and to be
performed entirely within Kentucky.
21. Consent to Jurisdiction. For those matters or disputes of any
nature arising out of, connected with, related or incidental to a party seeking
to compel action (other than payment) or cease a prohibited action, the parties
hereto hereby irrevocably submit themselves to the exclusive jurisdiction of the
courts of the State of Kentucky located in the City of Paducah, Kentucky and to
the jurisdiction of the United States District Court for the Western District of
Kentucky for the purpose of bringing any action that may be brought in
connection with the provisions hereof. The parties hereto hereby individually
agree that they shall not assert any claim that
-9-
<PAGE>
they are not subject to the exclusive jurisdiction of such courts, that the
venue is improper, that the forum is inconvenient or any similar objection,
claim or argument. Service of process on any of the parties hereto with regard
to any such action may be made by mailing the process to such Persons by regular
or certified mail to the address of such Person set forth herein or to any
subsequent address to which notices shall be sent.
22. Agreement to Arbitrate. Except for those matters described in
Section 21 above, in the event of any other dispute arising out of connected
with, related or incidental to this Agreement and the documents or instruments
delivered in connection herewith, such dispute shall be submitted to arbitration
in accordance with the terms of this Section. The party who is alleging that a
dispute exists shall send a notice of such dispute to all other parties, which
notice shall set forth in detail the dispute, the parties involved and the
position of such party with respect thereto. Within ten (10) business days after
the delivery of such a notice, counsel for the parties shall deliver a joint
request to the Managing Partner of the Cincinnati, Ohio Office of Strauss &
Troy, Esq., requesting such person to deliver a list of ten (10) prospective
arbitrators, all of whom such partner believes to be experienced in commercial
arbitration, along with a brief resume of each such person. The parties shall do
all things necessary to reasonably cooperate in the selection of the ten (10)
persons, including holding Strauss & Troy harmless from any and all claims
arising out of such selection and arbitration. If such Managing Partner
declines, the list of ten (10) shall be selected by the party asking for
arbitration receiving a list from any private dispute resolution firm with
offices in Cincinnati. The arbitrator shall be selected as follows: within three
(3) days after the list is delivered to each party, each party shall assign rank
of preference to each available arbitrator, with number one being the most
preferable and ten being the least preferable (i.e., a different rank must be
assigned to each available arbitrator) and deliver such rankings confidentially
to the person or firm which created the list; in the event of a tie, the person
or firm which created the list shall then select the arbitrator from the two
potential arbitrators which have tied. The single arbitrator with the lowest
total score shall be the arbitrator for the dispute. The arbitrator so selected
shall schedule a hearing in Paducah, Kentucky, on the disputed issues within
forty-five (45) days after his appointment, and the arbitrator shall render his
decision after the hearing, in writing, as expeditiously as is possible, and
shall be delivered to the parties. The arbitrator shall render his decision
based on written materials supplied by the parties to the arbitration in support
of their respective oral presentations at the hearing, and no party shall be
entitled to discovery in such matter. Each party shall supply a copy of any
written materials to be submitted to the arbitrator at least fifteen (15) days
prior to the scheduled hearing. The parties agree that the arbitrator shall not
have any power or authority to award punitive damages. A default judgment may
-10-
<PAGE>
be entered against any party who fails to appear at the arbitration hearing.
Such decision and determination shall be final and unappealable and shall be
filed as a judgment of record in any jurisdiction designated by the successful
party. The successful party shall be entitled to recover all fees, costs and
expenses incurred in connection with such arbitration. The parties hereto agree
that this paragraph has been included to rapidly and inexpensively resolve any
disputes between them with respect to the matters described above, and that this
paragraph shall be grounds for dismissal of any court action commenced by any
party with respect to a dispute arising out of such matters.
THE PARTIES AGREE THAT ANY ARBITRATION SHALL BE GOVERNED BY AND PURSUANT TO THE
FEDERAL ARBITRATION ACT, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
23. Exceptions to Exclusive Jurisdiction and Mandatory Arbitration.
Notwithstanding the provisions of Sections 21 and 22 hereof, in the event that
there is a third party action which may give rise to rights of indemnification
or contribution from one party(ies) to another, the parties hereto irrevocably
submit themselves to the jurisdiction of the court in which such third party
action is brought, and the party to be indemnified may, but shall not be
obligated to, bring a third party action or other appropriate proceeding to
enforce such rights of indemnification or contribution. The foregoing is not
intended to confer any rights upon any other party other than the parties
hereto.
24. Effect of Disputes. Notwithstanding the fact that there may from
time to time be disputes among the parties concerning the terms and conditions
hereof, the parties agree not to under any circumstances, disparage, criticize
or denigrate the talents, skills, prospects, abilities, integrity or character
of the other parties hereto, or such parties' management, directors, employees,
agents or representatives (including those of the Company's affiliates). Grogan
further agrees that he will not, at any time after the date hereof and without
the Company's written consent, contact any past, present or prospective
customer, supplier, employee or agent or representative of his with the intent,
purpose or effect of injuring the reputation, business or business relationships
of the Company and/or its affiliates. The provisions of this Section shall
survive the execution and termination hereof, irrespective of the reason for
such termination.
25. Mutual Drafting. This Agreement is the joint product of the
Company, Grogan and their respective counsel, and each provision hereof has been
subject to the mutual consultation, negotiation and agreement of such
-11-
<PAGE>
parties and counsel, and shall not be construed for or against any party hereto.
IN WITNESS WHEREOF, the parties hereto have entered into this
Employment Agreement as of the date first written above.
GROGAN'S MERGER CORP.
By ____________________________ ________________________________
Merrick M. Elfman, Chairman Bobby L. Grogan
-12-
<PAGE>
EXHIBIT A
States included in Non-Compete
Illinois
Kentucky
Indiana
Wisconsin
Arkansas
Mississippi
Texas
Alabama
Tennessee
Missouri
Virginia
Ohio
Louisiana
Grogan acknowledges that products of the Company and its predecessors have been
and are currently being sold in all of the foregoing areas.
-13-
<PAGE>
EXHIBIT 2.17
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
DATED AS OF OCTOBER 1, 1996
AMONG
ATLANTIC BEVERAGE COMPANY, INC.,
GROGAN'S MERGER CORP.,
GROGAN'S FARM, INC.,
BOBBY L. GROGAN
AND
BETTY RUTH GROGAN
<PAGE>
EXECUTION COPY
AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (this "AGREEMENT"), dated as
of the 1st day of October, 1996, by and among GROGAN'S MERGER CORP., a Delaware
corporation ("SUBSIDIARY"), ATLANTIC BEVERAGE COMPANY, INC., a Delaware
corporation and the sole stockholder of Subsidiary ("ABEV") and GROGAN'S FARM,
INC., a Kentucky corporation ("GFI") and BOBBY L. GROGAN and BETTY RUTH GROGAN,
husband and wife and residents of Kentucky and the only stockholders of GFI
("OWNERs"). Owners and GFI are hereinafter referred to collectively as the
"SELLING PARTIES".
R E C I T A L S:
WHEREAS, GFI is engaged in the business (the "BUSINESS") of
manufacturing and marketing prepared food products and related products and
services; and
WHEREAS, the parties deem it desirable, upon the terms and conditions
contained herein, that GFI be merged with and into Subsidiary, with Subsidiary
being the surviving corporation (the "MERGER"); and
WHEREAS, for Federal income taxes it is intended that the Merger
qualify as a "reorganization" within the meaning of Section 368(a)(2)(D) of the
Internal Revenue Code of 1986, as amended (the "CODE").
NOW, THEREFORE, and in consideration of the mutual premises and
representations, warranties and covenants and other good and valuable
consideration, the receipt and sufficiency of which being acknowledged, the
parties agree as follows:
1. MERGER. On the Closing Date (as defined in Section 4 hereof), in
reliance on the representations, warranties, and agreements of the parties, and
on the terms and subject to the conditions set forth herein, GFI will be merged
with and into Subsidiary pursuant to the provisions and with the effect provided
in the general corporation laws of Delaware and Kentucky. The parties shall
execute and deliver appropriate merger documents under the corporate laws of
Delaware and Kentucky, containing the terms provided in this Agreement,
including Certificates of Merger which shall be filed with the Secretaries of
State of Delaware and Kentucky on the Closing Date. The Merger shall become
effective when properly executed Certificates of Merger are so filed.
As a result of the Merger, each share of the common stock of ABEV,
$0.01 par value theretofore authorized (whether issued or unissued) shall remain
unchanged
<PAGE>
and shall be deemed to be shares of the common stock of ABEV. Accordingly, each
such share of common stock outstanding on the Closing Date shall continue to be
and remain issued and outstanding shares of common stock of ABEV without any
action on the part of the holders of any such shares of stock. As a result of
the Merger, each share of the common stock of the Subsidiary, $0.001 par value
theretofore authorized (whether issued or unissued) shall remain unchanged and
shall be deemed to be shares of the common stock of the Subsidiary as the
surviving corporation. Accordingly, each such share of common stock outstanding
on the Closing Date shall continue to be and remain issued and outstanding
shares of common stock of the Subsidiary as the surviving corporation without
any action on the part of the holders of any such shares of stock.
2. CONVERSION OF SHARES. As a result of the Merger and without any
action on the part of Owners, as the holders of all of the issued and
outstanding shares of capital stock of GFI (collectively, the "SHARES"), all of
the Shares and all rights in respect thereof shall (subject to ABEV's and
Subsidiary's rights to indemnification as provided in Section 13 hereof) be
exchanged for and converted into an aggregate of Five Hundred Seventy Three
Thousand Eight Hundred Ten (573,810) shares of ABEV's common stock (the "ABEV
STOCK"), Subsidiary's promissory note (the "NOTE") in the principal amount of
$200,000 in the form of SCHEDULE A, attached hereto, and cash (the "CASH") in
the amount of SEVEN HUNDRED THOUSAND DOLLARS ($700,000.00) plus interest thereon
at the rate of seven per cent (7%) per annum accrued from October 1, 1996 to the
Closing Date plus a reimbursement (the "REIMBURSEMENT") of all funds incurred by
GFI in connection with work done with respect to GFI's cooking line, which
expenses shall first be approved by ABEV, payable as set forth below. The ABEV
Stock, the Cash and the Reimbursement is hereinafter sometimes referred to
together as the "MERGER CONSIDERATION".
Each share of ABEV Stock shall be fully paid and non-assessable. From
and after the Closing, the certificates representing the Shares shall evidence
ownership in ABEV and the right to receive the Cash and the Reimbursement on the
basis set forth in the foregoing paragraph, and the conversion shall be complete
and effective at the Closing without regard to the date on which the Shares are
surrendered for exchange for certificates representing the ABEV Stock. The ABEV
Stock will be subject to the restrictions and conditions set forth in Section
121 hereof and the certificates representing the ABEV Stock shall contain a
legend to reflect such restrictions and conditions.
3. DELIVERY OF MERGER CONSIDERATION. On the terms and subject to the
conditions herein, the Cash and the Reimbursement shall be delivered to the
Selling Parties in immediately available funds at the Closing, and the
certificates representing the ABEV Stock shall be delivered within ten (10)
business days after the Closing Date.
-3-
<PAGE>
4. CLOSING. The consummation of the transactions contemplated hereby
(the "CLOSING") shall take place no earlier than ten (10) days after all
conditions precedent have been satisfied, but no later than sixty (60) days
after the date hereof, at 9:00 A.M. (the "CLOSING DATE") at the law offices of
the Selling Parties' counsel in Paducah, Kentucky, or otherwise, on such other
date or place as the parties hereto may mutually agree. The transactions shall
be effective for financial purposes as if the ownership of the shares changed
hands as of 8:00 a.m. on October 1, 1996, at which time Subsidiary shall take
control of the Business, and all decisions of any nature in respect thereof. The
Closing shall occur concurrently with the transactions contemplated by each of
(i) the certain Asset Purchase Agreement dated September 27, 1996 among ABEV,
Grogan's Sausage, Inc., a Kentucky corporation and Owners (the "APA"), and (ii)
the certain Real Estate Purchase Agreement dated September 27, 1996 among
Subsidiary and Owners (the "RPA"). This Agreement, the APA, the RPA and all
other documents and instruments delivered in connection therewith are
hereinafter collectively referred to together as the "TRANSACTION DOCUMENTS".
5. THE SELLING PARTIES' REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS. Each of the Selling Parties hereby jointly and severally, with the
other Selling Parties, represents and warrants to, covenants and agrees with,
ABEV and Subsidiary, now and as of the Closing Date, as follows:
A. Organization, Standing and Power. GFI is a corporation duly
organized, validly existing and in good standing under the laws of Kentucky.
GFI's federal employer identification number, state identification number for
sales and tax purposes and all similar identification numbers are set forth on
PART A of EXHIBIT 5A, attached hereto. GFI has all requisite corporate power and
authority to own, lease and operate the assets owned, leased or operated by it
(collectively, the "Assets") and to carry on the Business as now being conducted
in the manner that, and in the places in which, the Business is now being
conducted. Neither the nature of the Business nor the ownership, operation or
leasing of real estate or personal property by GFI requires it to qualify as a
foreign corporation in any jurisdiction other than jurisdictions in which the
failure to so qualify would not materially and adversely affect the Business or
any of the Assets. GFI is not qualified to transact business as a foreign
corporation in any state. GFI does not conduct any business or own or lease any
asset or property of any nature outside of the United States. Each of the
Selling Parties have the full power and authority and legal capacity to enter
into and deliver this Agreement, participate in the Merger and perform all other
acts necessary or appropriate to consummate all of the transactions contemplated
hereby. GFI does not now and has never had any subsidiaries. The Assets are
described in PART B of EXHIBIT 5A. GFI is and has always been an "S"
corporation.
-4-
<PAGE>
B. Capital Structure; Ownership of Assets and Related Matters.
(i) The capital structure of GFI, including the
number of authorized, issued and outstanding shares of capital stock
are listed on PART A of EXHIBIT 5B(i), attached hereto. Owners own,
both beneficially and of record, all of the issued and outstanding
shares of capital stock, equity or equity equivalents in and to GFI. At
the Closing the Shares will be free and clear of all Encumbrances (as
defined below) of any nature whatsoever. In addition, GFI has and will
have, at Closing, good and marketable title to, or a valid and
transferable leasehold interest in, all of the Assets, except for such
Assets as may be sold or otherwise disposed of between the date hereof
and the Closing Date in the ordinary course of business. No other
"PERSON" (as defined in Section 15M hereof) has any fee, leasehold or
equitable interest in and to the Assets, except as set forth on PART B
of EXHIBIT 5B(i). Except as set forth on PART B of EXHIBIT 5B(i), on
the Closing Date, the Assets will be free and clear of all of the
following (hereinafter collectively referred to as "ENCUMBRANCES"):
security interests, liens, pledges, claims, charges, escrows,
encumbrances, options, rights of first refusal, mortgages, indentures,
security agreements or other agreements, arrangements, contracts,
commitments, understandings or obligations, whether written or oral,
encumbering title in any way, other than the Encumbrances created
hereby. None of the Selling Parties has any direct or indirect
financial stake in any Person which has an interest in any assets used
in conducting the Business, except for Owners' fee interest in the real
property located at Route 2, Arlington, KY 42021.
(ii) Except for this Agreement, there are no
outstanding options, warrants or other rights, contracts, commitments,
agreements, understandings, arrangements or restrictions relating to
the purchase or acquisition of any shares of capital stock or other
equity securities or interests of any nature of GFI.
(iii) GFI neither owns nor has ever owned, shares of
any class of capital stock of any other corporation and does not have
any interest in any other entity and there are no contracts,
commitments, agreements, understandings or arrangements relating to
such.
(iv) GFI has never assumed or succeeded to the
liabilities of any Person, whether by operation of law or otherwise,
and it has never been known by any other name or done business under
any other name. EXCEPT FOR SALES OF FINISHED GOODS IN AN AMOUNT NOT
EXCEEDING $600,000 IN THE LAST TWELVE MONTHS, THE BUSINESS DOES NOT
INCLUDE, AND HAS NEVER INCLUDED, THE SALE OF ANY PRODUCT OF ANY NATURE
TO ANY UNAFFILIATED THIRD PARTY, IT BEING REPRESENTED THAT,
-5-
<PAGE>
EXCEPT AS SET FORTH ABOVE, SALES OF PRODUCTS ARE UNDERTAKEN ONLY BY
GROGAN'S SAUSAGE, INC.
(v) Except for sales of inventory in the ordinary
course of business, and the rights of ABEV and Subsidiary hereunder,
there are no outstanding options, warrants or rights to purchase or
acquire any interest whatsoever in any of the Assets, and there are no
contracts, commitments, agreements, understandings, arrangements or
restrictions relating to the ownership or operation of any of the
Assets.
(vi) The Assets constitute all of the property
necessary for the conduct of the Business in the manner in which and to
the extent to which it is currently being conducted. To Owners'
knowledge, there is no fact, event or action which could result in an
adverse change in the Business, prospects, financial condition or
results of operations or the operation or ownership of the Assets by
Subsidiary following the Closing.
(vii) The Assets owned or leased by GFI on the date
hereof constitute, and will constitute at Closing, all of the
properties and assets used in the conduct of the Business on the date
hereof, are in good working condition, have been maintained in
accordance with industry standards, and are sufficient to conduct the
Business in a manner consistent with past practices. The Selling
Parties know of no condition which, either alone or with other
conditions, interferes with the economic value of any of the Assets or
the use thereof in the manner used by GFI in the Business.
(viii) The Assets do not include any interest of any
nature in any parcel of real property, except for the leases described
on EXHIBIT 5B(viii) (collectively, the "REAL ESTATE").
C. Authorization. This Agreement and all writings relating
hereto to be executed and delivered by each of the Selling Parties have been
duly authorized by all necessary action and constitute the valid and binding
obligations of each the Selling Parties, enforceable in accordance with their
respective terms. The individuals executing this Agreement and the other
documents executed in connection herewith, individually and on behalf of GFI,
have been duly authorized and have the legal capacity to execute all of such
documents in such capacities. Neither the execution and delivery hereof nor any
writing relating hereto nor the consummation by any of the Selling Parties of
the transactions contemplated hereby or thereby, nor compliance with any of the
provisions hereof or thereof, will: (i) conflict with or result in a breach of
GFI's Articles or Certificate of Incorporation or By-Laws; (ii) violate any
statute, law, rule or regulation or any order, writ, injunction or decree of any
court or governmental authority; (iii) violate or conflict with or constitute a
default under (or give rise to any right of termination, modification,
cancellation or acceleration under), any agreement or writing of any
-6-
<PAGE>
nature to which any of the Selling Parties is a party or by which the Assets may
be bound or affected, or result in the creation of any Encumbrance against or
upon any of the Shares or Assets under any agreement or writing to which any of
the Selling Parties is a party or by which any of them or their assets may be
bound or affected, or (iv) impair or in any way limit any governmental or
official license, approval, permit or authorization of GFI. Other than as set
forth on EXHIBIT 5C, attached hereto, no consent or approval of or notification
to any Person is necessary or required in connection with the execution and
delivery by any of the Selling Parties of this Agreement or any writing relating
hereto or the consummation of the transactions contemplated hereby or thereby.
D. Financial Statements.
(i) EXHIBIT 5D hereto consists of the balance sheets
and the related statements of income, changes in shareholders' equity
and accountant's substantially omitted disclosure compilation report
thereon, if applicable, as at and for the fiscal years ended December
31, 1994 and 1995, and all interim statements prepared to date for the
fiscal year to end December 31, 1996 (collectively and as updated, the
"HISTORICAL FINANCIALS"). EXHIBIT 5D shall be updated as interim
statements are prepared. The Historical Financials are true, correct
and complete and present fairly the financial position of GFI and the
results of its operations and changes in shareholders' equity as at the
dates thereof and for the periods covered thereby, do not include or
omit to state any material fact which renders them misleading, and have
been prepared in conformity with generally accepted accounting
principles applied on a consistent basis, except as may be disclosed in
the reports relating thereto. At the Closing, the Selling Parties shall
deliver to ABEV and Subsidiary a balance sheet dated as of the end of
the accounting period before the Closing Date (the "CLOSING BALANCE
SHEET") based on the best knowledge and good faith of the Owners, which
shall be prepared on a basis consistent with the Historical Financials
and in accordance with the provisions hereof. The Closing Balance Sheet
shall be certified by all of the Selling Parties as showing the
financial position of GFI as of that date.
(ii) Except as disclosed therein, the statements of
income included in the Historical Financials do not contain any items
of special or nonrecurring income, and the balance sheets included in
the Historical Financials do not, and the Closing Balance Sheet will
not, reflect any write-up or revaluation increasing the book value of
any asset, other than adjustments required by ABEV and Subsidiary's
outside auditors in the determination of the Merger Consideration, and
as disclosed thereon.
(iii) All pro forma adjustments made by any of the
Selling Parties or on any of the Selling Parties' behalf in any sales
brochure or other
-7-
<PAGE>
document or literature delivered to ABEV and Subsidiary as part of
their review of the Business are reasonable, appropriate and adequate.
E. Liabilities.
(i) The liabilities of GFI on the Historical
Financials consisted, and the liabilities on the Closing Balance Sheet
will consist, solely of obligations and liabilities incurred in the
ordinary and regular course of Business to Persons which are not
affiliated with any of the Selling Parties, except for lease payments
in connection with the Real Estate.
(ii) As of the Closing, GFI will have no material and
adverse liability or obligation of any nature whatsoever, including,
without limitation, known or unknown, fixed or contingent, accrued,
absolute, matured or unmatured, or any "LOSS CONTINGENCIES" considered
"PROBABLE" or "REASONABLY POSSIBLE" within the meaning of the Financial
Accounting Standards Board's Statement of Financial Accounting
Standards No. 5, which were not or will not be recorded on the
Historical Financials, the Closing Balance Sheet or on EXHIBIT 5E(ii)
hereof, it being the intent of the parties that every "material"
liability or obligation of every nature (including those liabilities or
obligations commonly referred to as "off-balance sheet" liabilities) be
properly disclosed to ABEV and Subsidiary, and properly accrued on
either the Historical Financials or the Closing Balance Sheet or
disclosed herein, as the case may be. All contingent liabilities either
not disclosed or disclosed on EXHIBIT 5E(ii) shall be for the account
of the Selling Parties for purposes of determining indemnification
hereunder, and, if any such liability is paid by ABEV and Subsidiary,
then, such payment shall be deemed accrued on the books of the Business
as of September 30, 1996 for the purpose of retroactively adjusting the
Merger Consideration. Furthermore, should such undisclosed liability be
deemed a recurring operating expense of the Business, then for
indemnification purposes and otherwise, the Merger Consideration shall
be deemed to have been reduced Four Dollars ($4.00) for every dollar of
such operating expense, payable by a cash payment to Subsidiary.
(iii) All reserves and allowances included or to be
included in the Historical Financials and the Closing Balance Sheet
are, and will be, adequate, appropriate and reasonable (in accordance
with generally accepted accounting principles), as may be required by
ABEV and Subsidiary's outside auditors.
(iv) EXHIBIT 5E(iv) is a complete list (the
"PAYABLES' LIST"), as sworn to by the Selling Parties, of every
creditor of GFI, including taxing authorities (whether the liability to
such creditor is accrued, absolute, contingent or otherwise), listed by
name, address, amount of liability to such
-8-
<PAGE>
creditor, and whether such liability is disputed. The Payables' List
shall be updated as of the Closing Date.
F. Absence of Changes. Except as otherwise listed on EXHIBIT
5F hereto or as expressly permitted to satisfy the conditions precedent herein,
the Business has been operated only in the ordinary and regular course and there
has not been, since June 30, 1996 and through the Closing Date there will not
be, with respect to GFI: (i) any material and adverse change in its condition,
financial or otherwise; (ii) any material and adverse damage, destruction or
loss, whether or not covered by insurance; (iii) other than for purchases of
inventory in the ordinary course of business, the incurring of any obligation or
liability of any nature (whether absolute, accrued, contingent or otherwise and
whether due or to become due) in excess of $10,000.00; (iv) any transfer or
application of any assets of GFI to the payment of any amount payable to or for
its benefit or any of the following Persons ("SELLING PARTIES' AFFILIATES"): any
member of the family of Owners or any Person which is controlled, directly or
indirectly, by either Owner or by any member of the family of either Owner; (v)
any declaration, setting aside or payment of any dividend or other distribution
in respect of any shares of capital stock of GFI, or any direct or indirect
redemption, purchase or other acquisition of any such stock; (vi) any organized
labor negotiations, strike or work stoppage affecting the Business or any threat
of the foregoing; (vii) any sale, transfer or other disposition of any tangible
or intangible asset of GFI to any Person (except for (a) payments of third party
obligations incurred in the ordinary and regular course of business, in
accordance with the regular payment practice of GFI, and (b) sales of inventory
in the ordinary and regular course of business); (viii) any termination or
waiver of any rights of material value to the Business; (ix) the adoption of any
statute, rule, regulation or order which materially and adversely affects the
Business; (x) any increase in the compensation of, or benefits for, officers,
employees, independent contractors or other Persons performing services for GFI
(including, without limitation, any increase pursuant to any bonus, pension,
profit-sharing or other plan or commitment), having annual remuneration in
excess of $40,000, except for increases in accordance with GFI's normal salary
administration policies; (xi) other than improvements to the Real Estate, any
capital expenditure or commitment in excess of $20,000.00 for property, plant or
equipment; (xii) any forward purchase commitments not completed by the Closing
Date involving more than $20,000.00; (xiii) any material change in the
accounting methods or practices followed by GFI or any change in depreciation or
amortization policies or rates theretofore adopted; (xiv) any payment of any
liability or obligation of GFI in excess of $5,000.00 sooner than in accordance
with its usual or customary practices; (xv) any sale of goods or services to any
customer where the payment for such goods or services allows for the payment
therefor more than fifteen (15) days after the goods or services have been
provided to such customer; or (xvi) any commitment, obligation or understanding
to do any of the foregoing.
-9-
<PAGE>
G. Tax Matters. GFI has filed, and will timely file, all tax
returns and reports required to be filed and, in respect of any period ending
prior to or which includes the Closing Date, has paid, or has set up an adequate
reserve for the payment of, all taxes required to be paid or anticipated to be
payable, which reserve either is reflected in the Historical Financials or will
be reflected in the Closing Balance Sheet, as the case may be. All tax returns
of GFI for the last five (5) years have been delivered to ABEV and Subsidiary,
and there have been no audits of such returns. GFI has no liability for any
taxes in excess of the amounts so paid or reserves so established. GFI has
properly withheld and paid, and will properly withhold and pay, all payroll or
similar taxes. GFI is not delinquent in the payment of any tax, assessment,
penalties or interest and it has not requested any extension of time within
which to file any tax returns in respect of any fiscal year which have not since
been filed. All tax returns filed or to be filed are, or will be, true, complete
and correct. There are no tax liens on any of the Assets or Shares. No
deficiencies for any tax, assessment, penalties or interest have been proposed,
asserted, assessed or, to the knowledge of Owners, threatened against GFI which
would not be covered by existing reserves and, as of the date hereof, no
requests for waiver of the time to assess any such tax are pending. GFI is not
currently involved in an audit and, to the knowledge of Owners, none are
threatened. None of the Selling Parties have given or been requested to give
waivers of any statute of limitations relating to the assessment or payment of
any taxes for any taxable period. As of the Closing Date, all taxes collected
under color of law will have been remitted to the proper taxing jurisdiction.
For purposes hereof, the term "tax" shall include all Federal, state, local and
foreign taxes, assessments, and all franchise, sales, use, occupation, property,
excise or other taxes of any nature whatsoever, and governmental charges,
including penalties and interest relating to the foregoing. GFI does not have,
and will not have, any obligation of any nature to indemnify either Owner for
tax liabilities owing due to the intentional acts of either Owner.
H. Property Owned, Leased or Licensed.
(i) PART A of EXHIBIT 5H(i) contains a list of all
real estate leased by GFI (collectively, the "REAL ESTATE") and the
termination date or notice requirement with respect to termination,
annual rental and renewal or purchase options. GFI does not own any fee
interest in any real property and has no understandings, agreements or
commitments to purchase any.
(a) True and complete copies of all leases
relating to the Real Estate have been delivered to ABEV and Subsidiary.
The Selling Parties know of no interior or exterior structural defects
or other defects in the buildings or improvements thereto or in the
plumbing, electrical, mechanical, heating, ventilating,
air-conditioning, sprinkler or other systems thereof. To the knowledge
of Owners, PART B of EXHIBIT 5H(i), or the environmental assessment or
an update thereof to be delivered, at Owners' cost, to ABEV and
Subsidiary (along with the update, the "ENVIRONMENTAL
-10-
<PAGE>
REPORT") with respect to the Real Estate, sets forth the location of
all underground or below grade storage tanks, pumps, piping,
dispensers, or any retention pits located on any part of the Real
Estate, and a list of all documents, notices, test reports or other
information relating thereto including a description of substances
stored therein. In addition, at the Closing, each of the Selling
Parties will deliver a Certificate (the "ENVIRONMENTAL CERTIFICATE")
which details all known or suspected environmental concerns with
respect to the Real Estate and the operation of the Business not
expressly detailed in the Environmental Report or on PARt B of EXHIBIT
5H(i). The Environmental Certificate shall also detail the sources of
information utilized by the Selling Parties therein.
(b) With respect to the Real Estate: the
lessor has good and indefeasible title in fee simple thereto and owns
all buildings and other structures (excluding equipment and other
fixtures which are owned by GFI) thereon; there are no unrecorded
leases, Encumbrances, restrictions or other matters materially
affecting title or the current use thereof and no Person (other than
the lessor) has the right to impose or claim any interest whatsoever
thereon; and, there are no covenants, conditions, restrictions or other
title exceptions applicable thereto which are presently violated or
which adversely affect the marketability thereof and there are no
defects therein or thereon.
(c) To Owners' knowledge, the Real Estate is
not subject to or threatened with any requests, applications or
proceedings to condemn, rezone or demolish all or any portion thereof.
GFI has obtained all permits and certificates necessary for the use and
occupancy thereof and the improvements thereon and such use and
occupancy is and has been in full compliance with all federal, state
and local laws, rules and regulations. To the knowledge of Owners: (i)
all water, sewer, gas, electric, telephone, drainage and other utility
equipment, air conditioning, heating, ventilation and all other
facilities and services (collectively, the "SERVICES") required by law
or necessary for the operation of the Real Estate as it is now being
operated are installed and connected pursuant to valid permits, are
adequate to service such Real Estate, and are in good operating
condition and repair, and (ii) no material fact or condition exists
which would result in the termination or impairment in the furnishing
of any Service.
(d) None of the Selling Parties have
received notice of and have no awareness of any currently due, pending
or threatened general or special assessments, taxes, litigation or
governmental proceedings against or affecting or which may affect the
Real Estate. The most recent taxes and assessments with respect to the
Real Estate are set forth in PART C of EXHIBIT 5H(i).
-11-
<PAGE>
(e) To Owners' knowledge: each parcel of
Real Estate consists of one contiguous parcel, abuts on and has direct
vehicular access to a dedicated thoroughfare; and none of the Real
Estate is in an area designated as being subject to flood hazards or
risks.
(f) With respect to the leases covering the
Real Estate, such leases are in full force and effect, are valid and
binding obligations of the parties thereto, have not been amended and
are enforceable against the parties thereto in accordance with the
terms thereof. There are no defaults (alleged or actual) by either
party to such leases and no event has occurred which with due notice or
lapse of time or both would constitute a default. None of the Selling
Parties has any obligation to pay brokerage commissions or other
compensation in connection with such leases.
(ii) EXHIBIt 5H(ii) contains a list of each item of
machinery, equipment, tooling, office furniture, automobiles, trucks
and other fixed assets owned or leased by GFI (collectively, the "M&E")
and all locations thereof. EXHIBIT 5H(ii) also contains a list and
brief description of each lease or other agreement under which GFI pays
in excess of $5,000.00 annually to lease, license, hold or operate any
of the M&E. Copies of all leases relating to any item of M&E have been
delivered to ABEV and Subsidiary. The M&E will, individually or in the
aggregate, be fit for such assets' intended use as of the Closing Date.
(iii) None of the Selling Parties have any right,
title or interest in and to any (a) non-governmental licenses,
franchises, distribution or other similar rights, or (b) trademarks,
trade names (except for GFI's corporate name and trade name and
recipes), service marks, copyrights, know-how, software, written,
magnetic and storage media, inventions, designs, models, processes,
patents or any other proprietary rights and applications for any of the
foregoing. With respect to GFI's trade name and recipes, none of the
Selling Parties pay any royalty with respect to any of them, has the
exclusive right to bring actions for the infringement thereof and has
not granted any rights of any nature in any of them to any Person. No
product made or sold by GFI or for its benefit violates any license,
franchise or distribution agreement or infringes any trademark, trade
name, service mark, copyright, know-how, trade secret or patent of
another Person.
I. Insurance. GFI has maintained and presently maintains in
effect insurance covering the Assets and the Business from reasonably
foreseeable losses and any liabilities or risks relating thereto and such
insurance coverage shall be maintained by GFI through the Closing Date. Exhibit
5I hereto sets forth a complete and accurate schedule (including the type of
policy, the policy number, the limits of coverage, the carrier, the insurance
agent or broker and the expiration date) of all insurance policies, letters of
credit or performance bonds held or issued
-12-
<PAGE>
by or on behalf of GFI and now in force and those contemplated (including,
without limitation, comprehensive general liability, personal liability,
comprehensive general casualty and extended coverage, automobile, machinery,
fire and lightning, title, endowment, life, workers' compensation and fidelity
bond coverage) (collectively, the "INSURANCE POLICIES") and insurance agents
and/or brokers providing such insurance coverage. Except as disclosed on EXHIBIT
5I, such coverage fully complies with all contractual requirements of the
Business and GFI has not forfeited or waived any claim under any Insurance
Policies and each has fully complied with the terms and conditions thereof. The
products liability, personal injury and property damage insurance maintained has
been on an "OCCURRENCE" basis during the five-year period prior to the Closing
Date. EXHIBIT 5K sets forth all property damage or personal injury claims
asserted against GFI during the past three years, or otherwise still pending.
Except as otherwise set forth on EXHIBIT 5K, all of such claims have been and
are being defended by insurance carriers or indemnitors without reservation and
are or will be completely covered by the Insurance Policies. None of the Selling
Parties has received notification, either directly or indirectly, from any
insurance carrier, denying or disputing any claim made by GFI, denying or
disputing any coverage for any such claim, denying or disputing the amount of
any claim, or regarding the possible termination, cancellation or amendment of
or premium increase with respect to any Insurance Policies. GFI has no pending
or anticipated claim against any of the insurance carriers under any of such
policies and there has been no, to the knowledge of Owners, actual or alleged,
occurrence of any kind which may give rise to any such claim.
J. Agreements, Etc. EXHIBIT 5J contains a list of all written,
and brief description of all oral, contracts, agreements, leases,
understandings, commitments, licenses, letters of credit, instruments and
obligations, the open purchase and sales orders journals, if any, as of the
beginning of business on the date hereof (which journals shall be updated as of
the Closing Date), and other instruments and obligations not listed on another
Exhibit or schedule hereto (unless excluded therefrom due to the dollar amount
involved) affecting the Business in any manner whatsoever (collectively, the
"CONTRACTS"). With respect to the Contracts, except as otherwise set forth on
such EXHIBIT 5J: (i) all are in full force and effect, have not been modified or
amended, and constitute legal, valid and binding obligations of the respective
parties thereto; (ii) GFI has, in all material respects, performed all of the
obligations required to be performed by it to date and is not in default or, to
the Owners' knowledge, alleged, to be in default in any respect thereunder, no
party has been released from any obligation thereto and there exists no event,
condition or occurrence which, with or without notice, lapse of time or the
occurrence of any other event, would constitute a default thereunder by GFI or,
to Owners' knowledge, would constitute a default on the part of any other party
thereto; (iii) the continuation, validity and effectiveness under the current
terms thereof (including the current rentals under any leases or licenses) will
in no way be affected by the Merger or other transactions contemplated hereby,
or, if any would
-13-
<PAGE>
be affected without a consent or waiver, the Selling Parties shall cause an
appropriate consent or waiver respecting such transfer to be delivered to ABEV
and Subsidiary prior to the Closing Date at no cost or other adverse
consequences to GFI, ABEV or Subsidiary; and (iv) none require the payment or
performance of material considerations by GFI on or after the Closing Date
without the receipt of consideration of commensurate value, within the meaning
of applicable fraudulent conveyance laws or decisions. The Selling Parties have
furnished to ABEV and Subsidiary complete copies of all written Contracts and
complete written summaries of all oral Contracts described on any Exhibit
hereto. GFI is not restricted by any agreement to which it is a party from
carrying on the Business anywhere in the world. The Contracts confer on GFI all
rights necessary to enable it to conduct the Business as now being conducted (as
well as any expansion thereof now contemplated) and none imposes upon it any
unduly or extraordinary burdensome obligation.
K. Litigation and Claims, Etc. Except as set forth on Exhibit
5K, there are no personal injury, product liability or other actions, suits,
claims, investigations or legal or administrative or arbitration proceedings of
any nature pending or, to the knowledge of Owners, threatened, against or
involving any of the Selling Parties, the Assets, the Business or products,
whether at law or in equity, or before or by any foreign, federal, state,
municipal or other governmental or quasi-governmental instrumentality. Attached
to EXHIBIT 5K are (i) all service bulletins or similar notices to customers,
vendors or the public at-large and other Persons which discusses or notifies
such Persons about problems with GFI's products, and (ii) all notes from all
technical or engineering meetings (or the like) which relate in any way to
problems or potential problems of any nature with respect to such products. To
the knowledge of Owners, there is no basis for any other such action, suit,
claim, investigation or proceeding, and except as set forth on EXHIBIT 5K, none
of the foregoing has been pending during the last three years. There are no
outstanding orders, decrees or stipulations issued by any foreign, local, state
or federal judicial or governmental or quasi-governmental authority to which any
of the Selling Parties is or was a party or by which any is or was bound. The
insurance coverages in the Insurance Policies are adequate in character and
amount to pay all liabilities relating to the matters described in EXHIBIT 5K.
EXHIBIT 5K also details all "recalls" or similar measures or public notices
which occurred on or after January 1, 1995, and details GFI's system for
handling claims, whether under warranties or otherwise, and also lists all such
claims made in the last three years.
L. Compliance; Governmental Authorizations; OSHA.
(i) GFI is in compliance, in all material respects,
with all federal, state and local laws, ordinances, regulations,
permits, licenses, decrees, judgments and orders applicable to the
Business, and has all foreign and United States, federal, state and
local governmental licenses and permits
-14-
<PAGE>
necessary for the conduct of the Business as presently conducted or
contemplated; such licenses and permits are legally valid and in full
force and effect; no violations are or have been recorded in respect of
any thereof; and no proceeding is pending or, to the knowledge of
Owners, threatened, to revoke or limit any thereof. EXHIBIT 5L contains
a list and description (including subject matter and termination
information) of: (a) all such governmental licenses and permits (none
of which will be affected by the Merger or other transactions
contemplated hereby, unless otherwise indicated on said Exhibit); and
(b) all consents, orders, decrees and other compliance agreements under
which GFI is operating or bound, copies of all of which have been
furnished to ABEV and Subsidiary.
(ii) The Selling Parties have furnished to ABEV and
Subsidiary copies of all written reports in their control or possession
of inspections relating to the Business and properties from January 1,
1994 through the date hereof under the Occupational Safety and Health
Administration Act, as amended, or comparable state legislation and all
other applicable foreign and United States federal, state and local
health and safety laws and regulations or any other law, rule or
regulation that either GFI or the Business is subject. To the knowledge
of Owners, there have been no other similar inspections. The
deficiencies, if any, noted on such reports or any deficiencies noted
by inspection through the Closing Date have been corrected, or will be
corrected by the Closing. To the knowledge of Owners, there is no other
safety, health, environmental or other material problem or concern
relating to the Business.
M. Inventories. The inventories of GFI included on the
Historical Financials and to be included on the Closing Balance Sheet are and
will be valued with respect to each category of inventory at the lower of cost
or market value, net of reserves. Such inventories are all usable in the
ordinary and regular course of the Business, and are fit and sufficient for the
purpose for which they were purchased. All excess and obsolete items have been
written down to net realizable value, or written off, and all obsolete, damaged
or spoiled items have been destroyed. The inventories which were in transit on
the date hereof, and the inventories which are in transit on the Closing Date do
not and will not include any items which are damaged, spoiled or below standard
quality (except items for which GFI will receive credit or replacement from the
manufacturer or shipper thereof). GFI has exercised, and through the Closing
Date will exercise, its best efforts to have, the proper amount of inventories
to conduct the Business consistent with past practices. All inventories are
located at the Real Estate. GFI's inventories do not have any allocation of
overhead except as specifically disclosed on EXHIBIT 5M. Except as specifically
disclosed on EXHIBIT 5M, the inventory consists of items of quality and quantity
usable in the normal course of the Business. The Selling Parties will provide to
ABEV and Subsidiary a list of all inventory (the "INVENTORY LIST") on hand as of
the end of the monthly accounting period ending closest to the
-15-
<PAGE>
Closing Date, which list will comply with all of the requirements contained in
Sections 5D and 5M hereof.
N. Employee Matters. GFI has generally enjoyed a good
employer-employee relationship with their respective employees. GFI has accrued
on the Historical Financials, and will accrue, adequate reserves on the Closing
Balance Sheet, for all wages, salaries, contractual bonuses, vacation pay and
other direct and indirect compensation earned by, or accrued for the benefit of,
all employees (whether or not vested or payable by such date). The Closing
Balance Sheet will also include accruals for year end contractual bonuses,
pension and profit-sharing contributions, and any other adjustments which might
normally be made only at year end. Upon termination of the employment of any
employee of GFI, none of it, ABEV or Subsidiary will incur any liability for any
severance or termination pay, pension or profit-sharing benefit or other similar
payment under GFI's practices or policies in effect on or prior to the Closing
Date. Except as set forth on EXHIBIT 5K, there are no controversies pending or,
to the knowledge of Owners, threatened by any of GFI's employees, former
employees, job applicants or any association, group or other Person or Persons
regarding any of the Selling Parties' employment practices or policies.
GFI is not a party to or bound by any employment or consulting
agreement, any collective bargaining agreement or any other agreement with a
labor union. There is not pending or, to the knowledge of Owners, threatened any
labor dispute, strike or work stoppage (whether by their own employees or
another Person's employees) which may affect the Business or which may interfere
with its continued operation. GFI has complied with all laws, rules and
regulations in connection with all employment matters, including, without
limitation, hiring and firing of employees, wage matters, collective bargaining
matters, and matters relating to the National Labor Relations Act and the
Workers Adjustment and Retraining Notification Act, and to Owners' knowledge,
there are no activities or proceedings of any labor union to organize any
employees thereof. During the twelve-month period preceding the date hereof,
there have not been any significant labor troubles involving employees of GFI
and there are no significant threats of work stoppages by such employees.
EXHIBIT 5N contains a list of all directors, officers, managers,
employees, consultants, independent contractors and other Persons rendering any
service to GFI who, during the 1996 fiscal year, are expected to receive
remuneration in excess of $25,000, together with the current job title and
aggregate remuneration rate (bonus and salary) for each such person, as well as
the total remuneration paid to date and expected amount of remuneration in 1996.
-16-
<PAGE>
O. Employee Benefit Plans.
(i) Except as is described in EXHIBIT 5O(i), neither
any of the Selling Parties nor any current or former Plan Affiliate of
any of the Selling Parties has at any time had any liability with
respect to any of the following (whether written, unwritten or
terminated): (a) any "employee welfare benefit plan," as defined in
Section 3(1) of ERISA, (b) any "employee pension benefit plan," as
defined in Section 3(2) of ERISA, or (c) any other plan, policy,
program, arrangement or agreement providing employee benefits (or other
similar benefits) to former employees, dependents, beneficiaries,
directors or independent contractors, including, but not limited to,
any bonus or incentive plan, stock option, restricted stock, stock
bonus plan, salary reduction agreement, change-of-control agreement,
severance agreement, material fringe benefit program, short-term
disability plan or sick leave, personnel policy, vacation time, holiday
pay, moving expense reimbursement program, employment agreement or
consulting agreement which could result in ABEV or Subsidiary having
any liability, whether direct or indirect.
(ii) As used herein, the following terms shall have
the following respective meanings: (a) the term "EMPLOYEE PLAN" shall
mean any plan, policy, program, arrangement or agreement described in
Section 50(i), whether or not scheduled; and (b) the term "ERISA" shall
mean the Employee Retirement Income Security Act of 1974, as amended.
(iii) With respect to any person or entity ("FIRST
PERSON"), the term "PLAN AFFILIATE" shall mean any other person or
entity with whom the First Person constitutes all or part of a
controlled group, or which would be treated with the First Person as
under common control or whose employees would be treated as employed by
the First Person, under Section 414 of the Code and any regulations,
administrative rulings and case law interpreting the foregoing.
(iv) No Employee Plan (a) is subject to Title IV of
ERISA, (b) is a "multiemployer plan" as defined in Section 4001 of
ERISA, a "multiemployer plan" within the meaning of Section 3(37) of
ERISA, a "multiple employer plan" within the meaning of Code Section
413(c) or a "multiple employer welfare arrangement" within the meaning
of Section 3(40) of ERISA, or (c) provides any welfare-type benefits
for retirees or former employees, or their spouses or dependents
(except for limited continued medical benefit coverage for former
employees, their spouses and other dependents as required to be
provided under Section 4980B of the Code).
-17-
<PAGE>
(v) A complete copy of each written Employee Plan as
amended to the Closing, together with Form 5500 Annual Reports for the
three (3) most recent plan years, if any; a copy of any funding vehicle
with respect to each such plan; a copy of the most recent determination
letter with respect to such plan (if any); have been delivered to ABEV
and Subsidiary. A description of the material terms of any unwritten
Employee Plan is set forth in EXHIBIT 5O(v). No person has made any
statement, whether oral or in writing, regarding any Employee Plan
which will result in any liability to ABEV or Subsidiary in excess of
any liability previously disclosed pursuant to this paragraph.
(vi) Each Employee Plan (a) has been and currently
complies in form and in operation in all respects with all applicable
requirements of ERISA and the Code and any other applicable Federal and
state laws, (b) has been and is operated and administered in compliance
with its terms (except as otherwise required by law); (c) has been and
is operated in compliance with the applicable requirements of the Code
and ERISA in such a manner as to qualify, where appropriate, for both
Federal and state purposes, for income tax exclusions to its
participants, tax-exempt income for its funding vehicle, and the
allowance of deductions and credits with respect to contributions
thereto; and (d) where applicable, has received a favorable
determination letter from the Internal Revenue Service.
(vii) With respect to each Employee Plan, no person
has: (a) has entered into any non-exempt "prohibited transaction," as
such term is defined in ERISA or the Code; or (b) has breached a
fiduciary obligation; which could subject ABEV or Subsidiary to any
liability.
(viii) With respect to each Employee Plan all
required or recommended contributions, payments, premiums,
contributions, reimbursements, expenses, accruals or other liabilities
for all periods ending prior to or as of June 30, 1996 (including
periods from the first day of the then current plan year to such date)
(a) have been fully satisfied, (b) will be accrued as of such date, or
(c) are subject to a funding arrangement separate from the assets of
GFI or any of its Plan Affiliates.
P. Transactions with Related Parties. EXHIBIT 5P lists all
amounts directly or indirectly paid (or deemed for accounting purposes to have
been paid) or to be paid by any of the Selling Parties, to, or received by any
of the Selling Parties from any Person which is controlled by, controls, or
under common control with, directly or indirectly, any of the Selling Parties
during the current and the last fiscal year for products or services (including
any charge for management, interest, capital employed, administrative,
purchasing, financial or other services) related in any way to the Business. For
purposes of this Section, the term "Selling Parties" shall include any and all
of the "Selling Parties' Affiliates."
-18-
<PAGE>
Q. Accounts and Notes Receivable. EXHIBIT 5Q contains an aged
list of unpaid accounts and notes receivable (the "Receivables") owing to GFI as
of a date not more than four (4) business days prior to the date hereof, with
the address of the Business' trade debtors. ABEV and Subsidiary shall be
furnished with an updated schedule of Receivables and any other information
relating thereto as ABEV and Subsidiary shall reasonably request on reasonable
advance notice. All of the Receivables reflected on the Historical Financials
and to be reflected on updated Receivables Schedules and the Closing Balance
Sheet constituted and will constitute only valid claims against third parties
not affiliated with any of the Selling Parties. The schedule of Receivables also
highlights trade debtors of GFI with principal places of business outside of the
continental United States. The Receivables arose or will arise from bona fide
transactions in the ordinary and regular course of Business and all (subject to
the reserve for bad debt) are collectible within thirty (30) days after they
arose or will arise (except with respect to the Receivables due and owing from
Wal-Mart and Kroger, which Receivables are collectible within sixty (60) days
after they arose or will arise), and are not subject to any defenses, set-offs
or counterclaims. The Historical Financials do, and the Closing Balance Sheet
will, include reserves for bad debt reasonably based on past customer
performance. Except as listed on EXHIBIT 5Q, GFI does not sell, and does not
contemplate selling, products directly to the United States of America or any
branch, agency or subdivision thereof. EXHIBIT 5Q also highlights those
customers of the Business whose accounts have been more than thirty (30) days
past due repeatedly over the past six (6) months.
R. Customers and Suppliers. EXHIBIT 5R is a list of the ten
(10) largest customers (excluding Grogan's Sausage, Inc.) and suppliers
(measured by U.S. dollar volume in each case) of the Business during the 1995
and 1996 (to date) fiscal years and the last twelve (12) months showing, with
respect to each, the name, address and dollar volume involved. GFI is not
required to provide any bonding, guaranty or other financial security
arrangements in connection with any transactions with any of their customers or
suppliers, except as described on EXHIBIT 5R. Owners have no knowledge or reason
to believe that as a result of the Merger or other transactions contemplated
hereby or otherwise, any customer or supplier listed on EXHIBIT 5R intends to
cease or substantially reduce, the purchase or sale, respectively, of goods or
services from or to ABEV and Subsidiary on terms and conditions similar to those
imposed on purchases and sales from and to GFI prior to the date hereof. The
Selling Parties do not know of any claims or disputes pending, contemplated or
threatened with respect to any of the parties referred to in EXHIBIT 5R and none
are concerned about the financial viability of any of such parties.
S. Miscellaneous Assets. The Assets do not and will not
include (i) any contracts for future services or prepaid items or deferred
charges, the substantial value or benefit of which will not be usable by ABEV
and Subsidiary
-19-
<PAGE>
after the Closing Date, and (ii) any goodwill, organization expense or other
intangible asset.
T. Bank Accounts; Officers; Directors; Credit Cards. Exhibit
5T is a list of all bank accounts, safe deposit and post office boxes and the
like in the name of or controlled by any of the Selling Parties with respect to
the Business and details about the Persons having access thereto. EXHIBIT 5T
also lists all officers, directors and managers of GFI and all credit or debit
cards under which it has or may have current or future liability and the names
of the Persons holding such cards.
U. Business Generally. Other than for events affecting the
economy or GFI's industry in general, since January 1, 1996, to the knowledge of
Owners, there have been no events, transactions or information affecting or
relating to GFI or the Business which could be reasonably expected to have a
material and adverse effect on the Business.
V. Reports and Studies. EXHIBIT 5V lists all reports and
studies relating to the Business or the sale thereof in the possession or
control of any of the Selling Parties prepared for the officers, directors,
management, stockholders and agents of the Selling Parties since January 1, 1995
by investment bankers, investment advisors, accountants, engineers,
environmental consultants, management consultants or any other Persons.
W. Environmental Matters.
(i) None of the Selling Parties has transported,
stored, treated or disposed, and none has allowed or arranged for any
other Person to transport, store, treat or dispose waste to or at: (a)
any location other than a site lawfully permitted to receive such waste
for such purposes or (b) any location designated for remedial action
pursuant to the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), the Resource Conservation
and Recovery Act, as amended ("RCRA"), or any similar federal, state or
local statute; and none has performed, arranged for or allowed by any
method or procedure such transportation or disposal in contravention of
any laws or regulations or in any other manner which may result in
liability for contamination of the environment. None of the Selling
Parties has disposed, and none has allowed or arranged for any other
Person to dispose, of waste upon property owned or leased by any of
them.
(ii) (a) No generation, use, handling, storage,
treatment, Release (as defined below), discharge, spillage or disposal
of any Hazardous Waste, Hazardous Substance or Hazardous Chemical (as
defined below) has occurred or is occurring at any site or Facility (as
defined below) at any time owned, leased or operated, directly or
indirectly, by any of the Selling Parties,
-20-
<PAGE>
(b) no Hazardous Waste or waste containing any Hazardous Substance or
Hazardous Chemical generated, used, handled, stored or treated by GFI
has been stored, Released, discharged, spilled or disposed of at any
site or Facility at any time owned, leased or operated, directly or
indirectly, by any of the Selling Parties, and (c) no site or Facility,
at any time, owned, leased or operated, directly or indirectly, by any
of the Selling Parties is or has been the site of any industrial
facility, dump or landfill.
(iii) No soil or water in, upon, under or adjacent to
any site or Facility at any time owned, leased, or operated, directly
or indirectly, by any of the Selling Parties has been contaminated by
any Hazardous Waste, Hazardous Substance or Hazardous Chemical and no
such site constitutes a nuisance of any kind or nature.
(iv) None of the Selling Parties has received
notification of any past or present failure by GFI to comply with any
laws, regulations, permits, franchises, licenses or orders applicable
to it or the Business, which have not been remedied, cured or complied
with. Without limiting the generality of the foregoing, none of the
Selling Parties has received any notification (including requests for
information directed to any) from any governmental or
quasi-governmental agency or Person asserting that GFI is or may be a
"potentially responsible party" for a remedial action at any Facility,
pursuant to the provisions of CERCLA, or any similar federal, state or
local statute assigning responsibility for the costs of investigating
or remediation of Releases of contaminants into the environment.
(v) For purposes of this Agreement, the terms
"Hazardous Waste", "Hazardous Substance", "Hazardous Chemical",
"pollutant", "contaminant", "Release" and "Facility" include any
"hazardous waste", "hazardous substance", "pollutant", "contaminant"
and "facility", respectively, within the meaning of RCRA, CERCLA, the
Emergency Planning and Community Rights to Know Act of 1986, as
amended, or any other federal, state or local law, rule or regulation
adopted pursuant thereto or otherwise relating to the disposal of
Hazardous Wastes or the cleanup of sites at which Hazardous Substances
have been released or the environment in general.
(vi) EXHIBIT 5W(vi) is a list of (a) locations
(identified by address, owner/operator, type of facility, type of
waste, and period of time the Facility was used) to which GFI has,
during the past three (3) years, transported, or caused to be
transported, or allowed or arranged for any other Person to transport,
any type of waste material, generated by either or its customers, for
storage, treatment, burning, recycling or disposal and (b) storage,
treatment, burning, recycling or disposal activities which either has
undertaken, during the past three (3) years, at locations then or
presently owned or occupied by either together with such other relevant
information
-21-
<PAGE>
concerning such locations as would enable ABEV and
Subsidiary to determine whether either has any liability for such
locations and the activities thereon, including, but not limited to,
property address, nature of either's interest in the property, current
owner of the property, nature of the activity conducted at such
location, type and form of waste, estimated volume of waste disposal on
or in ground, and period of time the activity was conducted.
X. Continuity of Business Enterprise. GFI operates at least
one significant historic business line, or owns at least a significant portion
of its historic business assets, in each case within the meaning of Treasury
Regulation Section 1.368-1(d).
Y. Additional Tax Matters.
(i) The fair market value of the ABEV Stock and
Merger Consideration received by Owners will be approximately equal to
the fair market value of the Shares surrendered in the Merger.
(ii) Subsidiary will acquire at least 90 percent of
the fair market value of the net assets and at least 70 percent of the
fair market value of the gross assets held by GFI immediately prior to
the Merger. For purposes of this representation, amounts paid by GFI to
Owners in cash or other property, GFI's assets used to pay its
reorganization expenses and all redemptions and distributions (except
for regular, normal dividends) made by GFI immediately preceding the
Merger will be included as assets of GFI held immediately prior to the
transactions.
(iii) The liabilities of GFI assumed by Subsidiary
and the liabilities to which the Assets are subject were incurred by
GFI in the ordinary course of business.
(iv) Owners will pay all expenses associated with the
preparation and negotiation of this Agreement and all documents
executed in connection herewith and the consummation of the Merger and
the other transactions contemplated hereby.
(v) There is no intercorporate indebtedness existing
between either Owner and GFI or between Subsidiary and GFI that was
issued, acquired or will be settled at a discount.
(vi) GFI is not an investment company as defined in
Sections 368(a)(2)(F)(iii) and (iv) of the Code.
(vii) GFI is not under the jurisdiction of a court in
a Title 11 or similar case within the meaning of Section 368(a)(3)(A)
of the Code.
-22-
<PAGE>
(viii) The fair market value of the Assets
transferred to Subsidiary will equal or exceed the sum of the
liabilities assumed by Subsidiary, plus the amount of liabilities, if
any, to which the Assets are subject.
Z. Brokers and Finders. Except for The March Group, LLC, whose
commission shall be borne entirely by Owners, none of the Selling Parties nor
any officer, director or employee thereof, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and, except as stated above, no broker or finder
has acted directly or indirectly for any of the Selling Parties in connection
with this Agreement and the transactions contemplated hereby.
AA. Securities' Issues.
(i) Owners have a joint net worth, at the date
hereof, of over $1,000,000.00, and therefore Owners are "accredited
investors" within the meaning of Rule 501(a) promulgated by the
Securities and Exchange Commission ("SEC") under the Securities Act of
1933, as amended (the "1933 ACT").
(ii) Owners have such knowledge and experience in
financial matters (either by themselves or with their financial
advisors) that they are capable of evaluating the relative risks and
merits of an investment in the ABEV Stock.
(iii) Owners have received all of the SEC Reports (as
defined below). In making their decision have the Shares exchanged for
the ABEV Stock, Owners have relied solely upon independent
investigations made by them or their financial advisors, and they have
received no representation or warranty from ABEV or any of its
affiliates, employees or agents, except as expressly set forth herein.
(iv) Owners understand that the ABEV Stock has not
been registered under the 1933 Act or the securities acts of any of the
states of the United States or other possessions or areas subject to
its jurisdiction, in reliance on exemptions for private offerings and
may be sold or disposed of in the absence of such registration only
pursuant to an exemption from such registration and only in accordance
with the terms, conditions and restrictions contained in this
Agreement. The shares of ABEV Stock being delivered to Owners shall
bear a legend to the following effect:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
may not be sold or transferred except in compliance with that
Act. The securities represented by this certificate are
subject to the transfer restrictions,
-23-
<PAGE>
voting requirements and other conditions and provisions of an
Agreement and Plan of Reorganization dated as of October 1,
1996 by and among GROGAN'S MERGER CORP., ATLANTIC BEVERAGE
COMPANY, INC., GROGAN'S FARM, INC., BOBBY L. GROGAN and BETTY
RUTH GROGAN, copies of which are on file at the principal
executive offices of Atlantic Beverage Company, Inc."
(v) Owners understand that no federal or state agency
has made any finding or determination as to the fairness of an
investment in, or any recommendation or endorsement of, the ABEV Stock.
(vi) The ABEV Stock being transferred to Owners will
be held by Owners solely for their own account (and not for the account
of others) for investment and will not be held with a view to or for
the resale, distribution, subdivision, or fractionalization thereof;
Owners have no present intention or plans to enter into any contract,
undertaking, agreement, or arrangement relating thereto.
(vii) Owners acknowledge that: there are substantial
restrictions on the transferability of the ABEV Stock; the ABEV Stock
acquired will not be, and Owners have no right to require that the ABEV
Stock be, registered under the 1933 Act; there may not be any public
market for the ABEV Stock or such market may be limited; and,
accordingly, Owners may not be able to liquidate their investment in
the ABEV Stock in a timely manner.
(viii) IN FURTHERANCE OF THE FOREGOING, OWNERS
ACKNOWLEDGE THAT THERE WILL BE PLACED WITH ABEV'S TRANSFER AGENT "STOP
TRANSFER" ORDERS WITH RESPECT TO THE ABEV STOCK.
BB. Material Disclosures. No representation, warranty,
covenant or agreement by the Selling Parties contained herein, and no statement
contained in any certificate, Schedule, Exhibit, list or other writing furnished
to ABEV and Subsidiary in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. All Schedules and Exhibits hereto and all writings furnished to ABEV
and Subsidiary hereunder or in connection with the transactions contemplated
hereby are accurate, true and complete. All representations, warranties,
covenants and agreements made by the Selling Parties herein and all other
agreements and instruments delivered in connection herewith or pursuant hereto
and facts and information contained in the Exhibits and Schedules shall be true
and correct as of the Closing Date with the same effect as if they had been made
at and as of the Closing Date. There are no facts, conditions, or aspects
relating to the past or present operations
-24-
<PAGE>
of GFI and the Business which are not set forth herein which would have a
material adverse affect upon the operation of the Business after the Closing
Date or ABEV and Subsidiary's investment decision in consummating the Merger,
and none of the Selling Parties know of any fact, event or action which could
result in a material adverse change in the Business, prospects, financial
condition or results of operations of GFI and the Business or the operation or
ownership of the Assets by ABEV and Subsidiary following the Closing. The
records of GFI relating to the Business are accurate and complete in all
material respects and there are no matters as to which appropriate entries have
not been made in such records.
6. ABEV AND SUBSIDIARY'S REPRESENTATIONS, WARRANTIES, AGREEMENTS AND
COVENANTS. Each of ABEV and Subsidiary hereby jointly and severally, represents
and warrants to, covenants and agrees with, the Selling Parties, now and as of
the Closing Date, as follows:
A. Organization, Standing and Power. Each of ABEV and
Subsidiary is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Each has all requisite power
and authority to own, lease and operate the Assets and to carry on the Business
after the Merger and other transactions contemplated hereby. Each of ABEV and
Subsidiary has the full power and authority to enter into this Agreement and
perform all acts necessary or appropriate to consummate all of the Merger and
other transactions contemplated hereby.
B. Authorization. This Agreement and all writings relating
hereto to be executed and delivered by ABEV and Subsidiary have been duly
authorized by all necessary action and constitute the valid and binding
obligations of ABEV and Subsidiary, enforceable in accordance with their
respective terms. The individuals executing this Agreement and the other
documents executed in connection herewith on behalf of ABEV and Subsidiary have
been duly authorized to execute all of such documents on behalf thereof. Neither
the execution and delivery hereof nor any writing relating hereto nor the
consummation by ABEV and Subsidiary of the transactions contemplated hereby or
thereby, nor compliance with any of the provisions hereof or thereof, will: (i)
conflict with or result in a material breach of the Certificates of
Incorporation or By-Laws of ABEV and Subsidiary; (ii) violate any statute, law,
rule or regulation or any order, writ, injunction or decree of any court or
governmental authority; (iii) violate or conflict with or constitute a default
under (or give rise to any right of termination, modification, cancellation or
acceleration under), any agreement or writing of any nature to which either ABEV
and Subsidiary is a party or by which its assets may be bound or affected, or,
except as consented to by ABEV and Subsidiary, result in the creation of any
Encumbrance against or upon any of their assets under any agreement or writing
to which either is a party or by which either or their assets may be bound or
affected; or (iv) impair or in any way limit any governmental or official
license, approval, permit or authorization of either ABEV and Subsidiary. Other
than LaSalle National Bank,
-25-
<PAGE>
no consent or approval of or notification to any Person is necessary or required
in connection with the execution and delivery by ABEV and Subsidiary hereof or
any writing relating hereto or the consummation of the transactions contemplated
hereby or thereby.
C. Continuity of Business Enterprise. It is the intention of
Subsidiary to continue at least one historic significant business line of GFI,
or to use at least a significant portion of GFI's historic business assets, in
each case within the meaning of Treasury Regulation Section 368-1(d).
D. Additional Tax Matters.
(i) Prior to the transaction, ABEV will be in control
of Subsidiary within the meaning of Section 368(c)(1) of the Code.
(ii) Following the transaction, Subsidiary will not
issue additional shares of its stock that would result in ABEV losing
control of Subsidiary within the meaning of Section 368(c)(1) of the
Code.
(iii) ABEV has no plan or intention to reacquire any
of its stock issued in the transaction.
(iv) ABEV has no plan or intention to liquidate
Subsidiary; to merge Subsidiary with and into another corporation; to
sell or otherwise dispose of the stock of Subsidiary; or to cause
Subsidiary to sell or otherwise dispose of any of the assets of GFI
acquired in the transaction, except for dispositions made in the
ordinary course of business or transfers described in Section
368(a)(2)(C) of the Code.
(v) No stock of Subsidiary will be issued in the
transaction.
(vi) ABEV and Subsidiary shall pay their respective
expenses, if any, incurred in connection with the transactions.
(vii) There is no intercorporate indebtedness
existing between ABEV and GFI or between Subsidiary and GFI that was
issued, acquired or will be settled at a discount.
(viii) Neither ABEV nor Subsidiary is an investment
company as defined in Section 368(a)(2)(F)(iii) and (iv) of the Code.
E. Brokers and Finders. Neither ABEV and Subsidiary nor any
officer, director or employee thereof, has employed any broker or finder or
incurred any liability for any financial advisory fees, brokerage fees,
commissions or finders' fees, and except as stated above, no broker or finder
has acted directly or indirectly
-26-
<PAGE>
for ABEV and Subsidiary, in connection with this Agreement and the transactions
contemplated hereby.
F. SEC Issues.
(i) The ABEV Stock to be issued has been duly
authorized and, upon issuance, will be validly issued, fully paid and
nonassessable, and free and clear of all Encumbrances, except as
expressly set forth in this Agreement.
(ii) The authorized capital stock of ABEV consists of
30,000,000 shares of common stock, $.01 par value per share and
5,000,000 shares of preferred stock, $.01 par value per share, of which
(as of June 30, 1996), 5,740,984 shares of common stock were issued and
outstanding, no shares of preferred stock were issued and outstanding,
and there were options to acquire 287,836 shares of common stock
outstanding, and 396,000 shares of common stock are held in the
treasury of ABEV.
(iii) Except for the 1996 Proxy Statement, ABEV has
filed all forms, reports and documents required to be filed by it with
the SEC since January 1, 1996, and has heretofore made available to
Owners, in the form filed with the SEC (excluding any exhibits
thereto), (i) its Annual Report on Form 10-K for the fiscal year ended
December 31, 1995, and (ii) all other forms, reports and other
registration statements filed by ABEV with the SEC since January 1,
1996 (such forms, reports and other documents being hereinafter
referred to collectively as the "SEC Reports").
(iv) The SEC Reports and any other forms, reports and
other documents filed by ABEV with the SEC after the date of this
Agreement (i) were or will be prepared in accordance with the
requirements of the 1933 Act and the Securities Exchange Act of 1934,
as amended (the "1934 Act"), as the case may be, and the rules and
regulations thereunder, and (ii) did not at the time they were filed,
or will not at the time they are filed, contain any untrue statement of
a material fact or omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not
misleading.
(v) The financial statements (including, in each
case, any notes thereto) contained in the SEC Reports were prepared in
accordance with generally accepted accounting principles applied on a
consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each fairly presented the financial
position, results of operations and cash flows of ABEV as at the
respective dates thereof and for the respective periods indicated
therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which were not
-27-
<PAGE>
and are not expected, individually or in the aggregate, to be material
in amount).
(vi) Since December 31, 1995 there has not been any
change, occurrence or circumstance in the business, results of
operations or financial condition of ABEV having, individually or in
the aggregate, a material adverse effect on its business, other than
changes, occurrences and circumstances referred to in any subsequently
filed SEC Reports.
(vii) There is no claim, action, proceeding or
investigation pending or, to the knowledge of ABEV, threatened by any
public official or governmental authority, against ABEV, or any of its
property or assets before any court, arbitrator or administrative,
governmental or regulatory authority or body, which challenges the
validity of this Agreement or the ABEV Stock or any action taken or to
be taken pursuant hereto or, except as set forth in the SEC Reports,
which is reasonably likely to have a material adverse effect on ABEV's
business.
G. Material Disclosures. No representation, warranty, covenant
or agreement by ABEV and Subsidiary contained herein, and no statement contained
in any certificate, Schedule, Exhibit, list or other writing furnished to any of
the Selling Parties in connection with the transactions contemplated hereby,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained herein or therein not
misleading. All Schedules and Exhibits hereto and all copies of all writings
furnished to the Selling Parties hereunder or in connection with the
transactions contemplated hereby are accurate, true and complete. All
representations, warranties, covenants and agreements made by ABEV and
Subsidiary herein and facts and information contained in the Exhibits and
Schedules shall be true and correct as of the Closing Date with the same effect
as if they had been made at and as of the Closing Date. There are no facts,
conditions, or aspects relating to the past or present operations of ABEV and
Subsidiary which are not set forth herein which would have a material adverse
affect upon the operation of the Business.
7. CLOSING TRANSACTIONS. On the Closing Date (or on a date otherwise
indicated herein):
A. The Selling Parties shall deliver or cause to be delivered to ABEV
and Subsidiary:
(i) The Shares, with attached assignments and
appropriate Letters of Transmittal, as shall be reasonably sufficient
to evidence that the Shares are free and clear of all Encumbrances.
(ii) Such bills of sale, endorsements, assignments,
receipts and other instruments, in such form as are reasonably
satisfactory to ABEV
-28-
<PAGE>
and Subsidiary, to evidence that the Assets are free and clear of all
Encumbrances.
(iii) Such keys, lock and safe combinations, and new
bank signature cards and other similar items as ABEV and Subsidiary
shall require to obtain full occupation and control of the Assets and
Business.
(iv) The Certificates required by Sections 9A and 9B
hereof.
(v) The legal opinion of counsel to the Selling
Parties, in substantially the form as Schedule B attached hereto.
(vi) Certificate(s) of good standing of GFI certified
by the Secretary of State of Kentucky and all other states in which GFI
is qualified to transact business as a foreign corporation, dated
within thirty (30) days of the Closing Date.
(vii) A copy of the Articles (or Certificate) of
Incorporation of GFI, certified by the Secretary of State of Kentucky
within thirty (30) days of the Closing Date.
(viii) Possession of the Real Estate.
(ix) Such estoppel letters as are reasonably
requested by ABEV and Subsidiary, including those to be executed and
delivered by the landlords of the Real Estate, in form and substance
acceptable to ABEV and Subsidiary's counsel.
(x) All consents, waivers and releases necessary,
required or appropriate to consummate the transactions contemplated
hereby.
(xi) Uniform Commercial Code Tax, Lien and Judgment
Search results showing to the reasonable satisfaction of ABEV and
Subsidiary that all Encumbrances, if any, on the Assets and Shares have
been released.
(xii) An Authorization of Inspection, in form and
substance acceptable to ABEV and Subsidiary.
(xiii) Certificates of Title, as appropriate,
evidencing GFI's ownership of the Assets.
(xiv) The Closing Balance Sheet, and, as updated to
the end of the accounting period ended closest to the Closing, the
Inventory List, an updated Payables' List and an updated schedule of
Receivables.
-29-
<PAGE>
(xv) Certified copies of resolutions duly and
unanimously adopted by GFI's Board of Directors and Shareholders
approving the Merger and other transactions contemplated by, and
authorizing the execution, delivery and performance by GFI of, this
Agreement, and a certificate as to the incumbency of officers of GFI
executing any instrument or other document delivered in connection with
such transactions.
(xvi) Such documents and instruments as are necessary
to grant Subsidiary, and no other Person, the right to use all trade
names currently used by GFI.
(xvii) Results of environmental assessments
evidencing and indicating no environmental risk with respect to the
Real Estate.
(xviii) Such other documents as the ABEV and
Subsidiary may reasonably request.
B. ABEV and Subsidiary shall deliver or cause to be delivered to the
Selling Parties:
(i) The Cash, the Reimbursement and the Note.
(ii) Within ten (10) business days after the
Closing, stock certificates representing the ABEV Stock.
(iii) The Certificates required by Sections 10A and
10B hereof.
(iv) Certified copies of resolutions duly adopted by
ABEV and Subsidiary's Board of Directors approving the Merger and other
transactions contemplated by, and authorizing the execution, delivery
and performance by ABEV and Subsidiary of this Agreement, and a
certificate as to the incumbency of officers of ABEV and Subsidiary
executing any instrument or other document delivered in connection with
such transactions.
(v) Certificates of good standing of ABEV and
Subsidiary certified by the Secretary of State of the State of
Delaware, dated within thirty (30) days of the Closing Date.
(vi) A copy of the Certificate(s) of Incorporation of
ABEV and Subsidiary, certified by the Secretary of State of the State
of Delaware, dated within thirty (30) days of the Closing Date.
(vii) The legal opinion of Tom D. Wippman, P.C.,
counsel to ABEV and Subsidiary, in the form of Schedule C, attached
hereto.
(viii) Such other documents as the Selling Parties
may reasonably request.
-30-
<PAGE>
C. Subsidiary and Bobby L. Grogan will execute and deliver an
Employment Agreement in the forms attached hereto as Schedule D, attached
hereto.
D. ABEV and Subsidiary and Owners shall execute and deliver the RPA in
the form attached hereto as Schedule E, attached hereto.
E. ABEV and Subsidiary, and Owners and Grogan's Sausage, Inc. shall
execute and deliver the APA in the form attached hereto as Schedule F, attached
hereto.
F. Certain employees of GFI, including Darren Grogan, shall execute
non-compete agreements in form and substance acceptable to ABEV, in its sole
discretion.
8. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
A. Access to Records and Properties of GFI. From and after the
date hereof until the Closing Date, the Selling Parties shall afford (i) to all
representatives of ABEV and Subsidiary, free and full access at all reasonable
times to the assets, properties, books and records of GFI in order that ABEV and
Subsidiary may have full opportunity to make investigations of the assets and
affairs of GFI, and to such additional data and other information about the
Business and properties of GFI as ABEV and Subsidiary shall reasonably request
or that the Selling Parties believe in good faith ABEV and Subsidiary would want
to see in making its investment decision hereunder, and (ii) to the accountants
of ABEV and Subsidiary, free and full access at all times to work papers and
other records of GFI's accountants relating to the Business. Any such
investigation made pursuant to clause (i) or (ii) shall not affect or otherwise
diminish any of the representations, warranties, covenants or agreements of the
Selling Parties hereunder or ABEV and Subsidiary's rights to indemnification or
otherwise. All information to which ABEV and Subsidiary is given access shall be
kept strictly confidential except as required by law, statute, rule or
regulation and, should the transactions contemplated hereby fail to be
consummated, all such information shall be returned to the Selling Parties.
B. Operation of Business of GFI. From the date hereof to the Closing
Date, GFI shall operate only in the ordinary and regular course of business,
consistent with past practices, and shall:
(i) consult with ABEV and Subsidiary on a regular
basis with respect to all decisions outside of the ordinary and regular
course of business involving or otherwise which may have a material
affect on the Business;
-31-
<PAGE>
(ii) maintain the Assets in good repair, order and
condition, reasonable wear and use excepted;
(iii) maintain and keep in full force and effect all
Insurance Policies;
(iv) not, except as permitted under Section 5F: (a)
enter into any contract or agreement binding upon either which is to be
assumed by ABEV and Subsidiary hereunder and which is not immediately
terminable upon thirty (30) days notice without cost; (b) extend credit
in the sale of the products or services other than in accordance with
prior credit practices; (c) lease, buy or otherwise acquire any real
estate or any interest therein; (d) increase any type of compensation
payable or to become payable to any of employees, directors, agents or
representatives; (e) make any change in its capital structure; (f) do
any other thing or act described in Section 5F hereof; or (g) enter
into any agreement, commitment or understanding to do any of the
foregoing;
(v) not do anything outside of the ordinary course of
business which has the intent or effect of changing the Merger
Consideration;
(vi) use its best efforts to preserve intact its
business organizations, and to keep available to ABEV and Subsidiary
the services of all present officers, employees and agents and use its
best efforts to preserve for ABEV and Subsidiary the goodwill of
suppliers, customers and others having business relations with GFI; and
(vii) maintain its books, accounts and records in a
proper manner and in the usual, regular and ordinary manner on a basis
consistent with prior years.
C. Supplements. From time to time prior to the Closing Date,
the Selling Parties shall furnish to ABEV and Subsidiary supplemental
information with respect to any matters or events arising or discovered
subsequent to the date hereof which, if existing or known on the date hereof,
would have rendered any statement, representation or warranty made by the
Selling Parties or any information contained in any EXHIBIT or Schedule hereto
then inaccurate or incomplete; the furnishing of such supplemental information
shall not, however, affect or otherwise diminish any of the representations,
warranties, covenants or agreements of the Selling Parties hereunder. The
furnishing of any supplemental information which is materially different than
previously submitted information shall provide ABEV and Subsidiary with the
unilateral right to terminate this Agreement and any duties and obligations
hereunder, without cost or liability.
Notwithstanding the foregoing, ABEV and Subsidiary acknowledges that
the open purchase orders journals and open sales orders journals change in the
-32-
<PAGE>
ordinary and regular course of business; therefore, the Selling Parties shall
only be obligated to provide ABEV and Subsidiary with an updated list of such
journals as of the beginning of business on the Closing Date.
D. Risk of Loss. With respect to any material loss, damage,
condemnation or destruction of any of the Assets, upon any such loss, damage,
condemnation or destruction, ABEV and Subsidiary may at its option, cancel and
terminate this Agreement or proceed as follows: if, in the event of any such
material loss, damage or destruction prior to the Closing, ABEV and Subsidiary
elect not to terminate, the parties shall promptly attempt to agree on a
mutually satisfactory reduction in the total price to be paid for the Assets,
and the transaction shall be closed on the basis of such reduced price. If the
parties are unable to agree on such reduced value within seven (7) days after
notice to ABEV and Subsidiary of such loss, damage, destruction or taking and
ABEV and Subsidiary are not willing to conclude the transaction by payment of
the full price, then any party hereto may terminate this Agreement. In the event
the parties agree to a mutually satisfactory reduction of the price and the
transaction is closed on that basis, any insurance or condemnation proceeds
shall be paid to and retained by GFI. In the event the parties do not agree to a
mutually satisfactory reduction of the price, and ABEV and Subsidiary elect to
conclude the transaction by payment of the full price, any insurance or
condemnation proceeds shall be paid to and retained by ABEV and Subsidiary.
E. Consents, Waivers and Releases. The Selling Parties shall, at their
own cost and expense:
(i) Provide all necessary or appropriate consents and
comply with all provisions arguably relating to the transactions
contemplated hereby, including all federal, state or local laws, rules
and regulations;
(ii) Procure consents to the transactions
contemplated hereby, waivers of rights from, or releases from:
(a) all parties holding security interests
on any of the Assets;
(b) the stockholders and directors of GFI,
which consent shall be deemed to have been granted as of the date
hereof by Owners' execution hereof;
(c) all other parties deemed necessary or
appropriate by ABEV and Subsidiary.
All of such approvals, waivers, consents and releases shall be in form
and substance satisfactory to ABEV and Subsidiary and their counsel, in their
sole discretion.
-33-
<PAGE>
F. [THIS SECTION INTENTIONALLY LEFT BLANK]
G. Distributions to Owners from GFI. Between the date hereof
and September 30, 1996, there will not be, directly or indirectly, distributions
or dividends of any kind or nature from GFI to either Owner or any Selling
Parties' Affiliates except as permitted by ABEV. After September 30, 1996 and
until the Closing, there will not be, directly or indirectly, distributions or
dividends of any kind or nature from GFI to either Owner or any Selling Parties'
Affiliates other than the following (collectively, the "ALLOWED DISTRIBUTIONS"):
salary at the rate of $50,000 per year to Bobby L. Grogan.
H. Cooking Line. All expenses related in any manner to GFI's cooking
line shall first be approved by ABEV.
9. CONDITIONS OF OBLIGATIONS OF ABEV AND SUBSIDIARY. The obligations of
ABEV and Subsidiary to perform this Agreement are subject to the satisfaction of
the following conditions on or prior to the Closing Date:
A. Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements of the Selling Parties in
this Agreement or in any Schedule, Exhibit, certificate or document delivered in
connection herewith shall be true and correct in all material respects on the
Closing Date, and ABEV and Subsidiary shall have received a Certificate signed
by the Selling Parties to that effect.
B. Performance of Obligations of the Selling Parties. The Selling
Parties shall have performed all agreements and obligations required to be
performed by them on or prior to the Closing Date, and ABEV and Subsidiary shall
have received a Certificate signed by the Selling Parties to that effect.
C. Consents, Waivers and Releases. The Selling Parties shall
have obtained, or to the reasonable satisfaction of ABEV and Subsidiary obviated
the need to obtain, all consents, waivers and releases (including those
described in Section 8E) from third parties necessary to execute and deliver
this Agreement and consummate the transactions contemplated hereby. Also, ABEV
and Subsidiary shall have obtained the consent of ABEV and Subsidiary's Board of
Directors to execute and deliver this Agreement and consummate the transactions
contemplated hereby.
D. No Litigation. No action, suit or other proceeding shall be pending
before any court, tribunal or governmental authority seeking or threatening to
restrain or prohibit the consummation of the transactions contemplated hereby,
or seeking to obtain damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree or
regulation of any governmental authority having appropriate jurisdiction.
-34-
<PAGE>
E. Absence of Changes. Except as otherwise listed on Exhibit
5F hereto, since January 1, 1996, the Business has been operated only in the
ordinary and regular course and there has not been, and through the Closing Date
there will not be, with respect to GFI, any thing or act described in Section 5F
hereof, and there shall not have been, with respect to the Business, any adverse
changes.
F. Completion of Review by ABEV and Subsidiary. ABEV and
Subsidiary shall have completed their business, accounting, financial,
environmental and legal review of the Business and Assets, and ABEV and
Subsidiary shall, in their sole and absolute discretion, be satisfied with the
results of such investigation or otherwise waive this condition.
G. Financing and Additional Financial Matters. ABEV and
Subsidiary shall have procured financing in an amount and on terms and
conditions that are satisfactory to ABEV and Subsidiary, in their sole
discretion. Also, as of the Closing Date, ABEV and Subsidiary shall be satisfied
that (i) GFI shall have paid all liabilities in the ordinary course of business,
and (ii) for the period September 30, 1996 to the Closing Date, there shall have
been no distributions of any nature whatsoever from GFI to Owners or any Selling
Parties' Affiliates, except for the Allowed Distributions. In addition, ABEV and
Subsidiary shall have received satisfactory evidence that as of September 30,
1996, all expenses which are or should have been accrued, as provided by ABEV's
accountants, shall have been accrued (or paid), and, as of such date and the
Closing Date, there shall be sufficient cash on hand to discharge such
liabilities and accruals. Finally, ABEV and its accountants shall be satisfied
that the only audit of GFI which is required under appropriate SEC guidelines is
for the twelve-month period ended September 30, 1996.
H. Closing Documents. The Selling Parties shall have delivered, or
shall have caused the delivery of all appropriate documents and instruments
described in Section 7 hereof.
10. CONDITIONS OF OBLIGATIONS OF THE SELLING PARTIES. The obligations
of the Selling Parties to perform this Agreement are subject to the
satisfaction, on or prior to the Closing Date, of the following conditions:
A. Representations, Warranties, Covenants and Agreements. The
representations, warranties, covenants and agreements of ABEV and Subsidiary
herein or in any Schedule, Exhibit, certificate or document delivered in
connection herewith shall be true and correct in all material respects on the
Closing Date, and the Selling Parties shall have received a Certificate signed
by ABEV and Subsidiary to that effect.
B. Performance of Obligations of ABEV and Subsidiary. ABEV and
Subsidiary shall have performed all agreements and obligations required to be
-35-
<PAGE>
performed by it on or prior to the Closing Date, and the Selling Parties shall
have received a Certificate signed by ABEV and Subsidiary to that effect.
C. Consents, Waivers and Releases. ABEV and Subsidiary shall have
obtained, or to the reasonable satisfaction of the Selling Parties obviated the
need to obtain, all consents, waivers and releases from third parties necessary
to execute and deliver this Agreement, buy the Assets and consummate the
transactions contemplated hereby.
D. No Litigation. No action, suit or other proceeding shall be pending
before any court, tribunal or governmental authority seeking or threatening to
restrain or prohibit the consummation of the transactions contemplated hereby,
or seeking to obtain damages in respect thereof, or involving a claim that
consummation thereof would result in the violation of any law, decree or
regulation of any governmental authority having appropriate jurisdiction.
E. Closing Documents. ABEV and Subsidiary shall have delivered, or
shall have caused the delivery of, all appropriate documents and instruments
described in Section 7 hereof
11. CLOSING NOT A WAIVER. The fact that the parties have chosen to
consummate the transactions contemplated hereby shall not act or be deemed or
construed as a waiver of either party or estop either party from pursuing their
respective rights to indemnification hereunder or other remedies for any reason
whatsoever.
12. POST-CLOSING COVENANTS.
A. Restrictive Covenants.
(i) Nondisclosure. Each Owner acknowledges that
he/she has been and will be entrusted with trade secrets, marketing,
operating and strategic plans, customer and supplier lists, proprietary
information, recipes and other confidential or specialized data and/or
information relative to the Business, whether now existing or to be
developed or created after the Closing Date (collectively, "TRADE
SECRETS"). Each Owner covenants and agrees that he/she shall at all
times after the date hereof hold in strictest confidence any and all
Trade Secrets that may have come or may come into his/her possession or
within his/her knowledge concerning or related to the products,
services, processes, recipes, businesses, suppliers, customers and
clients of GFI and the Business and also that the Trade Secrets
constitute Assets of GFI and not of any individual. Each Owner
covenants and agrees that neither he/she nor any Person controlled by
his/her will for any reason, directly or indirectly, for
himself/herself or for the benefit of any other Person, use, copy,
divulge or otherwise disseminate or disclose any of the Trade Secrets
owned or used by, or licensed to, GFI or any of its affiliates or
-36-
<PAGE>
otherwise relating to GFI or the Business, provided that either Owner
may disclose Trade Secrets pursuant to an order by a court of competent
jurisdiction, provided, further, that such Owner shall give ABEV and
Subsidiary notice of such order and any court pleading requesting such
disclosure, in order to provide ABEV and Subsidiary with an opportunity
to prevent such disclosure or procure an appropriate protective order.
(ii) Customers and Trade Secrets. Each Owner
acknowledges that customers and customer accounts and the Trade Secrets
of GFI will, after the Closing and Merger, at all times be the sole and
separate property of Subsidiary, in which neither Owner has any rights
whatsoever, and all activities of or work performed by either Owner for
or on behalf of Subsidiary after the Merger will be performed solely
for the benefit of Subsidiary and the goodwill resulting from such
efforts by Owners is and at all times will be the sole and separate
property of Subsidiary, which goodwill is intended to be protected, in
part, by this Section.
(iii) Non-Solicitation; Non-Hire. Each Owner agrees
that from the Closing Date and continuing for a period (the
"NON-COMPETE PERIOD") of four (4) years from the Closing Date, neither
he/she nor any person or enterprise controlled by him/her will solicit
or hire or contract with, for employment, consulting or any other
reason, any person (except family members) who was employed by ABEV,
Subsidiary or GFI or any of such parties' affiliates as a manager,
sales person, officer, office head, buyer, driver,
accountant/controller or other key employee at any time within one (1)
year prior to the time of the act of solicitation, or hire.
(iv) Non-Competition by Owners. During the
Non-Compete Period, each Owner agrees that neither he/she nor any
person or enterprise controlled by him/her will become a stockholder,
director, officer, agent, employee or representative of or consultant
to a corporation or member of a partnership or limited liability
company, engage as a sole proprietor in any business, act as a
consultant to any of the foregoing or otherwise engage, directly or
indirectly, in any enterprise which competes with the Business in any
geographic area in which GFI currently, and the Subsidiary
subsequently, carries on such Business or contemplates or has the
capability of doing business on the date of the acts described above,
including the geographic areas set forth in EXHIBIT 12A(iv); provided,
however, that the foregoing shall not prohibit the ownership of less
than two percent (2%) of the outstanding shares of the stock of any
corporation engaged in any business, which shares are regularly traded
on a national securities exchange or in any over-the-counter market.
The Non-Compete Period shall be extended for that period of time during
which either Owner is in violation of the covenants contained in this
Section 12A.
-37-
<PAGE>
(v) Relief, Reformation; Severability. Each Owner
agrees that the covenants contained in this Section 12 are separate and
are reasonable in their scope and duration and may be enforced by
specific performance or otherwise. Neither Owner shall raise any issue
of reasonableness as a defense in any proceeding to enforce any of the
covenants herein. Notwithstanding the foregoing, in the event that a
covenant included in this Section 12 shall be deemed by any court to be
unreasonably broad in any respect, then, to the extent permitted, the
court which makes such finding shall modify such covenant for the
purpose of making such covenant reasonable in scope and duration. The
validity, legality or enforceability of the remaining provisions of
this Agreement shall not be affected by any such modification.
(vi) Remedies. Each Owner acknowledges that any
breach of the restrictive covenants herein will cause irreparable harm
to ABEV and Subsidiary, and that such harm will be difficult if not
impossible to ascertain. Therefore, if any action or proceeding is
commenced by or on behalf of ABEV or Subsidiary to enforce the
provisions hereof, they shall be entitled to equitable relief,
including injunction, against any actual or threatened breach hereof,
and any damages arising therefrom including, without limitation,
reasonable fees of its attorneys and their support staff and all other
costs and expenses incurred by either ABEV or Subsidiary in good faith
in connection therewith without bond and without liability should such
relief be denied, modified or vacated. Neither the right to obtain such
relief nor the obtaining of such relief shall be exclusive of or
preclude ABEV or Subsidiary from any other remedy. Each Owner hereby
waives the claim or defense to an action for equitable relief by the
other that ABEV or Subsidiary has an adequate remedy at law or has not
been or is not being irreparably injured by such breach. FURTHERMORE,
EACH OWNER HEREBY IRREVOCABLY WAIVES ANY RIGHT TO HAVE A JURY
PARTICIPATE IN RESOLVING ANY DISPUTE OF ANY NATURE ARISING OUT OF,
CONNECTED WITH, RELATED OR INCIDENTAL TO THE RESTRICTIVE COVENANTS
CONTAINED IN THIS SECTION 12 HEREOF. INSTEAD, ANY DISPUTES RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
B. Inventions. Owners shall and hereby do assign to ABEV and
Subsidiary their entire right, title and interest in all discoveries, computer
programs, processes and improvements, patentable or otherwise, trade secrets and
ideas, writings and copyrightable material, which have been or may be conceived
by either of them or developed or acquired by either of them during the
Non-Compete Period, which may pertain directly or indirectly to the Business.
Each Owner agrees to promptly and fully disclose in writing all such
developments. Each Owner acknowledges that all Trade Secrets and other ideas
relating to the Business which
-38-
<PAGE>
were or will be conceived by him/her before the date hereof or during the
Non-Compete Period have been, or shall be, assigned by them to Subsidiary. Each
Owner will, upon ABEV and Subsidiary's request, execute, acknowledge and deliver
to ABEV and Subsidiary all instruments and do all other acts which are necessary
or desirable to enable ABEV and Subsidiary to file and prosecute applications
for, and to acquire, maintain and enforce all letters, patents, trademark
registrations, or copyrights or enforce all rights in any intangible or
intellectual property in all countries.
C. Collection of Receivables. From and after the Closing,
Subsidiary shall have the sole right and authority to collect, for its own
account, all of the Receivables, and to endorse in GFI's name, any checks or
drafts received on account of any such Receivables or such other items. Each
Owner agrees that he/she will transfer or deliver to Subsidiary, promptly after
the receipt thereof, any cash or other property which he may receive after the
Closing in respect of any claims, contracts, licenses, leases, commitments,
sales orders, purchase orders, Receivables of any character or any other items
related directly or indirectly to the Business.
D. Power of Attorney. Effective as of the Closing, each Owner
hereby constitutes and appoints Merrick M. Elfman, Alan F. Sussna or their
successors and assigns, with the full power and right of substitution, as
Owners' true and lawful attorney: (i) to institute and prosecute all proceedings
which Subsidiary may deem proper in order to collect, assert or enforce any
claim, right or title of any kind in or to the Assets; (ii) to defend or
compromise any and all actions, suits or proceedings in respect of any of the
Assets, and to do all such acts and things in relation thereto as ABEV and
Subsidiary shall deem necessary or advisable; and (iii) to take all action which
ABEV and Subsidiary may reasonably deem proper in order to provide ABEV and
Subsidiary with all of the benefits relating to the Assets. Each Owner
acknowledges that the foregoing powers are coupled with an interest and shall be
irrevocable. Subsidiary shall be entitled to retain for its own account any
amounts collected pursuant to the foregoing powers, including any amounts
payable as interest in respect thereof.
E. Subrogation of ABEV and Subsidiary. In the event that ABEV
or Subsidiary shall become liable for or suffer any damage with respect to any
matter which was covered by insurance maintained by GFI on or prior to the
Closing, ABEV and Subsidiary shall be and hereby are each subrogated to any
rights of GFI under such insurance coverage, and, in addition, each Owner agrees
to promptly remit to ABEV and Subsidiary any insurance proceeds which he/she may
receive on account of any such liability or damage.
F. No Adverse Action. Neither Owners nor any of their agents
or representatives shall take any action, directly or indirectly, that would in
any way adversely affect ABEV and Subsidiary's efforts to obtain all proper
permits and
-39-
<PAGE>
authorizations necessary or appropriate to operate the Business in any manner
deemed reasonable by ABEV and Subsidiary.
G. Tax Matters. The Selling Parties, ABEV and Subsidiary each
agrees that each shall report the Merger as a tax-free reorganization pursuant
to Section 368(a)(2)(D) of the Code for federal income tax purposes and that
each will take or omit to take any and all actions required or recommended by
its respective counsel to cause the Merger to qualify as a tax-free
reorganization pursuant to Section 368(a)(2)(D) of the Code for federal income
tax purposes.
H. Indemnification Matters. From and after the Closing, to the
extent that either Owner has a right, either legal or equitable, to
indemnification, subrogation or other similar right or remedy from GFI for any
matter whatsoever, such Owner shall waive such right or remedy and shall not
attempt, whether directly or indirectly, to enforce or collect such right or
remedy at any time.
I. ABEV STOCK TRANSFER RESTRICTIONS AND OTHER CONDITIONS.
(i) Each Owner agrees and acknowledges, for
himself/herself and his/her Affiliates and Associates (as defined
below), that he/she is investing in the ABEV Stock for investment
purposes only and not with the intent or objective of affecting or
influencing the management or control of the business, operations or
affairs of ABEV. In furtherance of the foregoing, each Owner agrees,
during the period that either Owner owns (whether of record or
beneficially and whether directly or indirectly) any shares of ABEV
Stock, not to take, and not to permit any of his/her Affiliates or
Associates to take, actions which are inconsistent with this objective,
including, without limitation, acquiring, offering to acquire or
agreeing to acquire, directly or indirectly, by purchase, gift or
otherwise, any ABEV Stock or assets of ABEV except as expressly
permitted herein. In addition, while either Owner owns (whether of
record or beneficially and whether directly or indirectly) any shares
of ABEV Stock, each Owner will not, and will not permit any of his/her
Affiliates or Associates to, without the prior written consent of ABEV,
directly or indirectly:
(a) acquire, Beneficially Own (as defined
below), or offer, propose or agree to Beneficially Own any ABEV Stock
(other than that acquired hereunder) if, as a result of such
acquisition or ownership, the voting power of all ABEV Stock
Beneficially Owned by Owners (when aggregated) shall exceed 450,000
shares of ABEV Stock; or
(b) make, or in any way participate,
directly or indirectly, in, any "solicitation" of "proxies" to vote (as
such terms are used in the proxy rules of the SEC), initiate, propose,
communicate with or otherwise solicit stockholders of ABEV for the
approval of one or more stockholder
-40-
<PAGE>
proposals or induce or attempt to induce any other person
to initiate any stockholder proposal in opposition to any matter which
has been recommended by the majority of the directors of ABEV
(including the approved slate of directors for any particular election)
or in favor of any matter which has not been approved by the majority
of the directors of ABEV or seek to advise, encourage or influence any
person or entity with respect to the voting of any ABEV Stock, or
induce or attempt to induce any person to initiate any stockholder
proposal; or
(c) form, join, in any way participate in,
or act in concert with any Person or in any manner encourage the
formation of, a "group" (as such term is defined in Section l3(d)(3) of
the 1934 Act) with respect to any ABEV Stock, for the purpose of
acquiring, holding, voting or disposing or voting securities of ABEV,
or otherwise become a "person" or a member of a "group" within the
meaning of Section 13(d)(3) of the 1934 Act which Beneficially Owns or
seeks to Beneficially Own ABEV Stock; or
(d) except as contemplated hereby, deposit
any ABEV Stock into a voting trust, or subject any ABEV Stock to any
agreement or arrangement with respect to the voting of any ABEV Stock
or other agreement having similar effect; or
(e) seek to affect or influence the control
of the management or Board of Directors of ABEV or its business
operations or affairs, or make any proposal, whether written or oral,
to the Board of Directors of ABEV or any director or officer of ABEV
with respect to a tender offer for ABEV Stock, a merger or similar
business combination transaction or the sale of substantially all of
the assets of ABEV, or make any public statements with respect thereto;
or
(f) participate in, aid and abet or
otherwise induce any Person to take any of the actions enumerated in
(i) through (v) above or any other actions inconsistent therewith,
including the accumulation of ABEV Stock with any intent or objective
inconsistent therewith.
In furtherance of the foregoing, neither Owners nor any Affiliate nor
Associate thereof shall (i) nominate any Person to ABEV's Board of Directors or
(ii) stand for election to ABEV's Board of Directors. In addition, while Owners
Beneficially Own more than 50,000 in the aggregate, each Owner hereby agrees to
vote the shares of ABEV Stock Beneficially Owned by such Owner in favor of any
matter which has been approved by the majority of the directors of ABEV, and
agrees to deliver a proxy indicating such at least five (5) business days before
any vote is taken by ABEV's stockholders.
(ii) Each Owner will not, in any manner, directly or
indirectly, sell, transfer, pledge, encumber or otherwise dispose of
-41-
<PAGE>
(collectively, "Transfers") any shares of ABEV Stock (including any
shares of ABEV Stock not acquired hereunder) until the third
anniversary after such shares of ABEV Stock are acquired, except for
such Transfers as are in accordance with the following:
(a) Transfers of any ABEV Stock to any
Affiliate of such Owner; provided, that such Affiliate shall, upon such
transfer, become a party to, and bound by, this Agreement and agree to
be bound by all the provisions hereof; or
(b) Transfers of ABEV Stock pursuant to any
bona fide tender or exchange offer to acquire ABEV Stock or an "all
cash for any and all shares" offer, which is not opposed by a majority
of the Board of Directors of ABEV.
Thereafter, Transfers by each Owner shall only be permissible pursuant
to (a) and (b) immediately above and in sale(s) in the public market pursuant to
Rule 144 under the 1934 Act, and even in the event that Rule 144 is
inapplicable, in accordance with such Rule's volume restrictions; provided,
however, that no such Transfers via sale(s) in the public market shall be made
knowingly to any Person in contravention of the provisions or intent of the
restrictions contained in this Agreement. All Transfers, regardless of when such
Transfer is made, shall only be made in the thirty (30) day period following
ABEV's release of earnings. No private Transfers of any shares of ABEV Stock are
permitted unless with the prior approval of ABEV.
(iii) Both Owners shall be present, in person or by
proxy, at all meetings of stockholders of ABEV so that all ABEV Stock
Beneficially Owned by both Owners shall be counted for purposes of
determining the presence of a quorum at such meetings, provided that
Owner shall have received prior notice of any such meeting.
(iv) For purposes of this Agreement, the following
terms shall have the following meanings:
(a) "AFFILIATE" or "ASSOCIATE" shall mean
any Person that (i) directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, the Person specified or (ii) is (A) the specified
Person's spouse, parent, child, brother or sister or any issue of the
foregoing (for purposes of the definition of Affiliate or Associate,
issue shall include Persons legally adopted into the line of descent),
(B) any corporation or organization of which the Person specified or
such specified Person's spouse, parent, child, brother or sister or any
issue of the foregoing is an officer or partner or is, directly or
indirectly, the beneficial owner of ten percent or more of any class of
voting stock, and (C) any trust or other estate in which the specified
Person or such specified Person's spouse, parent, child,
-42-
<PAGE>
brother or sister or any issue of the foregoing serves as trustee or in
a similar fiduciary capacity and (D) the heirs or legatees of the
specified Person by will or under the laws of descent and distribution;
(b) "BENEFICIALLY OWN", with respect to any
securities, and "BENEFICIAL OWNERSHIP" shall mean having beneficial
ownership as determined pursuant to Rule 13d-3 under the 1934 Act
including pursuant to any agreement, arrangement or understanding,
whether or not in writing, and shall include those shares of ABEV Stock
Beneficially Owned by either Owner's Affiliates and Associates; and
(c) "PERSON" shall mean any individual,
partnership, joint venture, corporation, trust, limited liability
company, incorporated organization, government or department or agency
of a government, or any entity that would be deemed to be a "PERSON"
under Section 13(d)(3) of the 1934 Act.
(v) Each Owner acknowledges that any breach of the
covenants herein will cause irreparable harm to ABEV, and that such
harm will be difficult if not impossible to ascertain. Therefore, if
any action or proceeding is commenced by or on behalf of ABEV to
enforce the provisions hereof, ABEV shall be entitled to equitable
relief, including injunction, against any actual or threatened breach
hereof; and any damages arising therefrom including, without
limitation, reasonable fees of its attorneys and their support staff
and all other costs and expenses incurred by ABEV in good faith in
connection therewith without bond and without liability should such
relief be denied, modified or vacated. Neither the right to obtain such
relief nor the obtaining of such relief shall be exclusive of or
preclude ABEV from any other remedy. Each Owner hereby waives the claim
or defense to an action for equitable relief by the other that ABEV has
an adequate remedy at law or has not been or is not being irreparably
injured by such breach. FURTHERMORE, EACH OWNER HEREBY IRREVOCABLY
WAIVES ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE OF
ANY NATURE ARISING OUT OF, CONNECTED WITH, RELATED OR INCIDENTAL TO THE
COVENANTS CONTAINED IN THIS SECTION. INSTEAD, ANY DISPUTES RESOLVED IN
COURT WILL BE RESOLVED IN A BENCH TRIAL WITHOUT A JURY.
(vi) IN FURTHERANCE OF THE FOREGOING, OWNERS
ACKNOWLEDGE THAT THERE WILL BE PLACED WITH ABEV'S TRANSFER AGENT "STOP
TRANSFER" ORDERS WITH RESPECT TO THE ABEV STOCK.
-43-
<PAGE>
13. INDEMNIFICATION.
A. Owners agree to jointly and severally indemnify and hold
harmless ABEV and Subsidiary, and each of ABEV's and Subsidiary's shareholders,
subsidiaries, affiliates, officers, directors, agents and other representatives
(collectively, "ABEV's INDEMNIFIED PARTIES") against any and all damages,
losses, settlement payments, obligations, liabilities, claims, actions, causes
of action, suits, proceedings, costs of investigations, demands, assessments,
judgments, Encumbrances and costs and expenses (including, without limitation,
attorneys' fees, interest, penalties and all costs associated therewith incurred
by such party in good faith) (collectively, "LOSSES") suffered, sustained,
incurred or paid by any of ABEV's Indemnified Parties, to which such indemnified
party may become subject under any federal, state or local law, rule or
regulation, at common law or otherwise (including in settlement of any
litigation), insofar as such Losses (or actions in respect thereof) arise out of
or are based upon any of the following: (i) any untrue or inaccurate statement
or alleged untrue or inaccurate statement or misrepresentation or breach of
warranty made by any of the Selling Parties in any of the Transaction Documents,
including the information included in any EXHIBIT thereto, or arise out of or
are based upon any of the Selling Parties' omission or alleged omission to state
herein a material fact required to be stated in any of the Transaction Documents
or necessary to make the statements in the Transaction Documents not misleading;
(ii) the claims of any broker or finder engaged by any of the Selling Parties
pursuant to the transactions contemplated by the Transaction Documents; (iii)
the nonfulfillment or breach or alleged nonfulfillment or breach of any
agreement or covenant of any of the Selling Parties in any of the Transaction
Documents; (iv) the assertion against any of ABEV's Indemnified Parties or any
of their assets of any liability or obligation of any of the Selling Parties not
accurately disclosed in any of the Transaction Documents for any reason
whatsoever (regardless of whether such liability or obligation is known or
unknown, fixed or contingent, accrued, absolute, matured or unmatured or
otherwise), or relating to any of the Selling Parties, or the Business or
Assets, whether absolute or contingent, matured or unmatured, known or unknown;
(v) any personal injury, death, property damage or other claim (whether covered
by warranties or otherwise) attributable to services or products designed,
manufactured, processed, administrated, serviced or sold by GFI or any affiliate
thereof; and (vi) all items that are or should have been listed on EXHIBIT 5K
herein or the corresponding EXHIBIT in the APA; and will reimburse each
indemnified party for any legal or other cost or expense incurred by such party
in good faith in connection with investigating or defending any such loss,
claim, damage, liability or action. This indemnity agreement will be in addition
to any liability which either of the Owners may otherwise have and to any remedy
which ABEV and Subsidiary may otherwise have. To the extent that any matter
gives rise to indemnification hereunder, such matter shall be deemed to have
been accrued on the books of GFI and/or GSI as of June 30, 1996, for the
purposes of calculating the Merger Consideration, and if such matter is a
recurring operating expense of the Business,
-44-
<PAGE>
the Merger Consideration will be decreased by four (4) times the amount of the
matter. Notwithstanding the foregoing, if it is determined that ABEV or
Subsidiary have actual knowledge (i.e., not constructive knowledge or otherwise)
of a matter (other than matters related to taxes, USDA matters and litigation
and/or claims of any nature) which would give rise to indemnification hereunder
and choose to consummate the transactions without first adjusting the Merger
Consideration, ABEV and Subsidiary shall be deemed to have waived their right to
indemnification with respect solely to that matter.
B. ABEV and Subsidiary will indemnify and hold harmless Owners
and Owners' agents and representatives (collectively, "OWNERS' INDEMNIFIED
PARTIES") against any and all Losses suffered, sustained, incurred or paid by
any Owners' Indemnified Parties, to which such indemnified party may become
subject under any federal, state or local law, rule or regulation, at common law
or otherwise (including in settlement of any litigation), insofar as such Losses
(or actions in respect thereof) arise out of or are based upon any of the
following: (i) any untrue or inaccurate statement or alleged untrue or
inaccurate statement misrepresentation or breach of warranty made by ABEV and
Subsidiary in any of the Transaction Documents, including the information
included in any EXHIBIT thereto, or arise out of or are based upon ABEV and
Subsidiary's omission or alleged omission to state in any of the Transaction
Documents a material fact required to be stated therein or necessary to make the
statements therein not misleading; (ii) the claims of any broker or finder
engaged by ABEV and Subsidiary pursuant to the transactions contemplated by the
Transaction Documents; (iii) the nonfulfillment or breach or alleged
nonfulfillment or breach of any agreement or covenant of ABEV and Subsidiary in
any of the Transaction Documents; (iv) to the extent not indemnified pursuant to
Section 13A above, the assertion against any Owners' Indemnified Parties or any
of their assets of any liability or obligation of ABEV and Subsidiary, or
relating to ABEV and Subsidiary's operations or any of their assets, whether
absolute or contingent, matured or unmatured, known or unknown; and (v) to the
extent not indemnified pursuant to Section 13A above, any personal injury, death
or property damage attributable to products manufactured and sold by ABEV and
Subsidiary; and will reimburse each indemnified party for any legal or other
expenses reasonably incurred by such party in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which ABEV and Subsidiary may
otherwise have and to any remedy which Owners may otherwise have.
C. Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve it from
any liability which it may have to any indemnified party except to the extent
that the indemnifying party was prejudiced by such failure to notify or any
other liability.
-45-
<PAGE>
In case any such action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in and, to the extent that it may wish and
at its cost and expense, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if (i) the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, or the indemnified and indemnifying parties may have
conflicting interests which would make it inappropriate for the same counsel to
represent both of them, the indemnified party or parties shall have the right to
select separate counsel as set forth below, at the indemnifying parties' cost,
to assume such legal defense (in which case the indemnified parties' counsel
shall be the lead counsel in such defense) and otherwise to participate in the
defense of such action on behalf of such indemnified party or parties, and (ii)
an indemnifying party shall only be able to assume the defense of an action if
it can reasonably demonstrate its financial soundness and wherewithal (which may
include bonding over a reasonable reserve) necessary for a lengthy defense and
possible judgment. Upon receipt of notice from the indemnifying party to such
indemnified party of its election so to assume defense of such action and
approval by the indemnified party of counsel, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, unless (i) the indemnified party shall have employed such
counsel in connection with the assumption of legal defense in accordance with
the proviso to the next preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the expenses of more than one
separate counsel representing all indemnified parties not having different or
additional defenses or potential conflicting interests among themselves who are
parties to such action), (ii) the indemnifying party shall not have employed
counsel satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the action, or (iii)
the indemnifying party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying party. No indemnifying
party shall, without the prior written consent of the indemnifying party, effect
any settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability arising out
of such proceeding.
Notwithstanding anything contained herein to the contrary, an
indemnified party shall have no obligation to bring a third party action or an
action for indemnification or contribution simultaneously or in connection with
a third party action which may give rise to rights of indemnification or
contribution or similar remedies.
-46-
<PAGE>
D. Subject to the last sentence of Section 13A, each Owner
acknowledges that ABEV and Subsidiary is relying on all of the representations,
warranties, covenants and agreements contained in each of the Transaction
Documents, without respect to whether Owners had knowledge of the information
contained therein, and agree not to raise as a defense to a claim by ABEV and
Subsidiary for indemnification pursuant to this Section 13 or otherwise that
ABEV and Subsidiary had knowledge or either Owner did not have knowledge of the
untruth, inaccuracy, nonfulfillment or breach of, or ABEV and Subsidiary did not
rely upon, the representations, warranties, covenants or agreements of the
Selling Parties contained in the Transaction Documents. ABEV and Subsidiary
acknowledge that Owners are relying on all of the representations, warranties,
covenants and agreements contained in each of the Transaction Documents without
respect to whether ABEV and Subsidiary had knowledge of the information
contained therein and agrees not to raise as a defense to a claim by Owners for
indemnification pursuant to this Section 13 that either Owner had knowledge or
ABEV and Subsidiary did not have knowledge of the untruth, inaccuracy,
nonfulfillment or breach of, or Owners did not rely upon, the representations,
warranties, covenants and agreements of ABEV and Subsidiary contained in the
Transaction Documents.
E. All amounts that may become due from either Owner to ABEV
and Subsidiary after the determination that such amount has become payable
pursuant to any of the Transaction Documents, shall be paid jointly and
severally by Owners immediately upon demand by ABEV or Subsidiary, and if not so
paid within five (5) business days of such demand, such amounts may be offset by
ABEV and Subsidiary against any amounts then owing to either Owner under any
document, instrument, agreement or understanding (including, without limitation,
the Note, the RPA and the APA), and if the amount to be offset is greater than
the amount which is then currently owing to either Owner, then (i) such amounts
which are not then able to be immediately offset or are not then immediately
paid shall bear interest at the rate of fifteen percent (15%) per annum,
accruing from the date such amount is demanded until paid or later offset, and
(ii) ABEV and Subsidiary may pursue all other remedies available to them in
order to collect such amount. The foregoing remedies shall not be mutually
exclusive.
F. All amounts that may become due from ABEV and Subsidiary to
either Owner after the determination that such amount has become payable
pursuant to any of the Transaction Documents, shall be paid by ABEV and
Subsidiary immediately upon demand by such Owner, and if not so paid within five
(5) business days of such demand, such amounts may be offset by such Owner
against any amounts then owing to ABEV and Subsidiary under any document,
instrument, agreement or understanding, and if the amount to be offset is
greater than the amount which is then currently owing to ABEV and Subsidiary,
then (i) such amounts which are not then able to be immediately offset or are
not then immediately paid shall bear interest at the rate of fifteen percent
(15%) per annum,
-47-
<PAGE>
accruing from the date such amount is demanded until paid or
later offset, and (ii) either Owner may pursue all other remedies available to
them in order to collect such amount. The foregoing remedies shall not be
mutually exclusive.
l4. SURVIVAL OF REPRESENTATIONS, WARRANTIES, AGREEMENTS AND COVENANTS.
A. All representations, warranties, agreements and covenants
made by any party hereto in this Agreement shall survive the Closing of the
transactions hereunder.
B. The representations and warranties hereunder shall not be
affected or diminished by any investigation at any time by or on behalf of the
party for whose benefit such representations, warranties, covenants and
agreements were made, or the fact that such representations, warranties,
agreements and covenants were made to such party's knowledge.
15. MISCELLANEOUS.
A. Manner of Closing. At the Closing, all transactions shall
be conducted substantially concurrently and no transaction shall be deemed to be
completed until all are completed.
B. Access to Records. ABEV and Subsidiary shall afford to
Owners and their agents, the opportunity, upon reasonable advance notice, to
examine and make copies of the books and records of GFI having an effect on all
periods prior to the Closing Date, in connection with tax and financial
reporting matters and other bona fide business purposes, and ABEV and Subsidiary
shall use reasonable efforts to retain such books and records for a period of
four (4) years from the date of such books and records.
C. Parties in Interest. This Agreement shall be binding upon,
inure to the benefit of; and be enforceable by the parties and their respective
executors, successors and assigns. Furthermore, (i) Owners are prohibited from
selling, transferring, or otherwise distributing his interest in any part of the
Merger Consideration without first having the transferee or distributee becoming
jointly and severally liable for Owners' obligations hereunder, and (ii) should
either Owner already have, or in the future create, a trust for his benefit or
the benefit of any family member, then Owners' signatures below will constitute
and, if necessary, such trust will execute such instruments as are necessary to
evidence, such trust being jointly and severally liable for Owners' obligations
hereunder. By Owners' execution hereof, each hereby acknowledges that any trust
to which either has transferred, or in the future transfers, assets with the
intent, purpose or effect of estate planning purposes or to avoid liability
hereunder or of which either is the trustee or is a beneficiary, shall be
jointly and severally liable for all of Owners' obligations hereunder, without
the necessity for further action on any party's behalf
-48-
<PAGE>
Notwithstanding the foregoing, each Owner is prohibited from assigning his/her
interests hereunder, by operation of law or otherwise. Each Owner hereby
consents to a collateral assignment of ABEV's and Subsidiary's rights hereunder
to a lender, understanding that such lender shall have the ability to enforce
the rights of ABEV and Subsidiary granted herein.
D. Entire Agreement; Amendments. This Agreement, the Exhibits
and Schedules attached hereto, and the other writings referred to herein or
delivered in connection herewith contain the entire understanding of the parties
with respect to its subject matter, and supersedes all prior understandings and
agreements. This Agreement may be amended only by a written instrument duly
executed by the parties. Any reference herein to this Agreement shall be deemed
to include the Exhibits and Schedules attached hereto. If any provision of this
Agreement is determined to be illegal or unenforceable, such provision will be
deemed amended to the extent necessary to conform to applicable law or, if it
cannot be so amended without materially altering the intention of the parties,
it will be deemed stricken and the remainder of the Agreement will remain in
full force and effect.
E. Headings. The section and subsection headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement.
F. Notices. All notices, claims, certificates, requests,
demands and other communications ("COMMUNICATIONS") hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
mailed (by registered or certified mail, postage prepaid) or sent by overnight
courier service or facsimile addressed as follows:
If to any of the Selling Parties,
in care of Mr. Grogan, at: Bobby L. Grogan
Route #2
Arlington, KY 42021
With a copy to: Gary B. Houston, Esq.
WHITLOW ROBERTS HOUSTON
& STRAUB
Old National Bank Building
300 Broadway
Paducah, KY 42002-0995
Facsimile: (502) 443-4571
If to ABEV and Subsidiary: c/o Sterling Capital, Ltd.
650 Dundee Road, Suite 370
Northbrook, IL 60062
Facsimile: (847) 480-0199
-49-
<PAGE>
With a copy to: Tom D. Wippman, P.C.
650 Dundee Road, Suite 370
Northbrook, Illinois 60062
Facsimile: (847)480-0199
or to such other address as the person to whom a communication is to be given
may have furnished to the others in writing in accordance herewith. A
communication given by any other means shall be deemed duly given on the earlier
of when actually received by the addressee or three (3) days after sending such
communication. Notice hereunder to either Owner shall be deemed to be notice to
each of the Selling Parties.
G. Public Announcements. All public announcements relating to
this Agreement or the transactions contemplated hereby, including announcements
to employees, will be made only as may be agreed upon jointly by the parties
hereto, or as ABEV and Subsidiary considers required or appropriate to comply
with applicable law. Any governmental, public or private inquiries or requests
for information shall be promptly referred to ABEV and Subsidiary.
H. Further Assurances. After the Closing Date, without further
consideration, the parties shall execute and deliver such further instruments
and documents as either party shall reasonably request to consummate the
transactions contemplated hereby.
I. Waivers. Any party to this Agreement may, by written notice
to the other party hereto, waive any provision of this Agreement. The waiver by
any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent, same or different breach.
J. Materiality and Knowledge. The terms "MATERIAL" or
"MATERIALLY" or "MATERIALITY" shall mean either (i) the existence of a fact or
condition or facts or conditions which, if a dollar amount is readily
ascertainable with respect to such, has a value, either individually or in the
aggregate, of more than $10,000.00, except if such fact or condition relates to
taxes, claims and/or litigation in which case such matter shall be material
irrespective of the dollar amount, or (ii) the determination by a lender, in
such lender's sole and absolute discretion, that such fact or condition is, or,
if known to such lender would be, material for purposes of its making a loan to
ABEV and Subsidiary in order to consummate the transactions hereunder or to
avoid any acceleration of such loan, or (iii) any fact or condition which gives
rise to any right of termination, cancellation, acceleration or modification of
any agreement or understanding to which GFI is a party and such right has been
exercised. The term "KNOWLEDGE" shall mean (i) actual knowledge or notice, (ii)
that knowledge which a party should know after having made all reasonable
-50-
<PAGE>
inquiries and (iii) that an individual or individuals making a statement as to
its, his or her "KNOWLEDGE" has made all reasonable inquiries regarding the
facts and circumstances relating to such statement. For purposes of this
Agreement, the knowledge of any of the Selling Parties shall be deemed to be the
knowledge of all of the Selling Parties (i.e., the knowledge of one of the
Selling Parties shall be imputed to all other Selling Parties, including both
Owners), and the receipt of a notice by any shall be deemed to be receipt by
all. The knowledge of any employee of GFI shall be deemed to be the knowledge of
GFI.
K. Counterparts. The Agreement may be executed in one or more
counterparts, but all such counterparts shall constitute one and the same
instrument.
L. Certificate. A Certificate shall mean a certificate signed
by the individual stating that (i) such individual who is signing the
certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the individual's knowledge, after due
inquiry, such certificate does not misstate any material fact and does not omit
any fact necessary to make the certificate not misleading.
M. Use of Certain Terms. The term "GFI", and "Selling Parties"
shall also include all predecessors thereof and businesses acquired by or merged
therewith, or businesses whose liabilities (some or all) have been assumed by
GFI or the Selling Parties. The term "each of the Selling Parties" shall mean
any or all thereof, including Owners, whichever has the broadest meaning given
the particular context. The term "PERSON" shall mean an individual, a
partnership, a joint venture, a joint stock company, a corporation, a trust, an
unincorporated organization, a limited liability company, any other legal entity
and a government, governmental body or quasi-governmental body, or any
department, agency or political subdivision thereof
N. Applicable Law. The terms and conditions of this Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware applicable to agreements between Delaware residents entered into and to
be performed entirely within Delaware.
O. Consent to Jurisdiction. For those matters or disputes of
any nature arising out of, connected with, related or incidental to a party
seeking to compel action (other than payment) or cease a prohibited action, the
parties hereto hereby irrevocably submit themselves to the exclusive
jurisdiction of the courts of Kentucky located in the City of Paducah, Kentucky
and to the jurisdiction of the United States District Court for the Western
District of Kentucky for the purpose of bringing any action that may be brought
in connection with the provisions hereof. The parties hereto hereby individually
agree that they shall not assert any claim that they are not subject to the
exclusive jurisdiction of such courts, that the venue is improper, that the
forum is inconvenient or any similar objection, claim or
-51-
<PAGE>
argument. Service of process on any of the parties hereto with regard to any
such action may be made by mailing the process to such Persons by regular or
certified mail to the address of such Person set forth herein or to any
subsequent address to which notices shall be sent.
P. Agreement to Arbitrate. Except for those matters described
in Section 150 above, in the event of any other dispute arising out of,
connected with, related or incidental to this Agreement and the documents or
instruments delivered in connection herewith, such dispute shall be submitted to
arbitration in accordance with the terms of this Section. The party who is
alleging that a dispute exists shall send a notice of such dispute to all other
parties, which notice shall set forth in detail the dispute, the parties
involved and the position of such party with respect thereto. Within ten (10)
business days after the delivery of such a notice, counsel for the parties shall
deliver a joint request to the Managing Partner of the Cincinnati, Ohio Office
of Strauss & Troy, Esq., requesting such person to deliver a list of ten (10)
prospective arbitrators, all of whom such partner believes to be experienced in
commercial arbitration, along with a brief resume of each such person. The
parties shall do all things necessary to reasonably cooperate in the selection
of the ten (10) persons, including holding Strauss & Troy harmless from any and
all claims arising out of such selection and arbitration. If such Managing
Partner declines, the list of ten (10) shall be selected by the party asking for
arbitration receiving a list from any private dispute resolution firm with
offices in Cincinnati. The arbitrator shall be selected as follows: within three
(3) days after the list is delivered to each party, each party shall assign rank
of preference to each available arbitrator, with number one being the most
preferable and ten being the least preferable (i.e., a different rank must be
assigned to each available arbitrator) and deliver such rankings confidentially
to the person or firm which created the list; in the event of a tie, the person
or firm which created the list shall then select the arbitrator from the two
potential arbitrators which have tied. The single arbitrator with the lowest
total score shall be the arbitrator for the dispute. The arbitrator so selected
shall schedule a hearing in Paducah, Kentucky, on the disputed issues within
forty-five (45) days after his appointment, and the arbitrator shall render his
decision after the hearing, in writing, as expeditiously as is possible, and
shall be delivered to the parties. The arbitrator shall render his decision
based on written materials supplied by the parties to the arbitration in support
of their respective oral presentations at the hearing, and no party shall be
entitled to discovery in such matter. Each party shall supply a copy of any
written materials to be submitted to the arbitrator at least fifteen (15) days
prior to the scheduled hearing. The parties agree that the arbitrator shall not
have any power or authority to award punitive damages. A default judgment may be
entered against any party who fails to appear at the arbitration hearing. Such
decision and determination shall be final and unappealable and shall be filed as
a judgment of record in any jurisdiction designated by the successful party. The
successful party shall be entitled to recover all fees, costs and expenses
incurred in connection with such arbitration. The parties hereto agree that this
paragraph has been included to
-52-
<PAGE>
rapidly and inexpensively resolve any disputes between them with respect to the
matters described above, and that this paragraph shall be grounds for dismissal
of any court action commenced by any party with respect to a dispute arising out
of such matters.
THE PARTIES AGREE THAT ANY ARBITRATION SHALL BE GOVERNED BY AND PURSUANT TO THE
FEDERAL ARBITRATION ACT, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED
THEREUNDER.
Q. Exceptions to Exclusive Jurisdiction and Mandatory
Arbitration. Notwithstanding the provisions of Sections 15O and 15P hereof, in
the event that there is a third party action which may give rise to rights of
indemnification or contribution from one party(ies) to another, the parties
hereto irrevocably submit themselves to the jurisdiction of the court in which
such third party action is brought, and the party to be indemnified may, but
shall not be obligated to, bring a third party action or other appropriate
proceeding to enforce such rights of indemnification or contribution. The
foregoing is not intended to confer any rights upon any other party other than
the parties hereto.
R. Pronouns. All pronouns and any variations thereof shall be
deemed to refer to the masculine, feminine, singular and plural as the identity
of that person referred to requires.
S. Joint and Several Obligations. The duties and obligations
of each of the Selling Parties are joint and several, and the Selling Parties
hereby acknowledge the same, and each of the Selling Parties hereby guarantees
performance of all duties and obligations of the other under and pursuant to
this Agreement. Furthermore, where there is imposed an obligation or duty upon
one Selling Party, each of the other Selling Parties shall be jointly and
severally liable for ensuring the prompt compliance of such obligation or duty
thereof. Notwithstanding the foregoing, after the Merger, neither Owner shall be
entitled to contribution or other similar remedy or remedies from GFI for
Owners' obligations hereunder, it being the intent that only the Owners (or
their successors, assigns, trusts, etc.) shall be responsible for the indemnity
obligations hereunder.
T. Effect of Disputes. Notwithstanding the fact that there may
from time to time be disputes among the parties concerning the terms and
conditions hereof, the parties agree not to under any circumstances, disparage,
criticize or denigrate the talents, skills, prospects, abilities, integrity or
character of the other parties hereto, or such parties' management, directors,
employees, agents or representatives (including those of ABEV and Subsidiary's
affiliates). Each of the Selling Parties further agrees that each will not, at
any time after the date hereof and without ABEV and Subsidiary's written
consent, contact any past, present or prospective customer, supplier, employee
or agent or representative of GFI or ABEV and Subsidiary with the intent,
purpose or effect of injuring the
-53-
<PAGE>
reputation, business or business relationships of ABEV and Subsidiary. The
provisions of this Section shall survive the execution and termination hereof,
irrespective of the reason for such termination.
U. Mutual Drafting. This Agreement is the joint product of
ABEV and Subsidiary, GFI and Owners and their respective counsel, and each
provision hereof has been subject to the mutual consultation, negotiation and
agreement of such parties and counsel, and shall not be construed for or against
any party hereto.
-54-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered as of the date first above written.
ATLANTIC BEVERAGE COMPANY, INC.
By
Merrick M. Elfman, Chairman
GROGAN'S MERGER CORP.
By
Merrick M. Elfman, Chairman
GROGAN'S FARM, INC.
By
Bobby L. Grogan, President
Bobby L. Grogan
Betty Ruth Grogan
-55-
<PAGE>
EXHIBIT 2.18
<PAGE>
SECOND AMENDMENT TO
LOAN AND SECURITY AGREEMENT
This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (the "Amendment")
is dated as of October 17, 1996 among LASALLE NATIONAL BANK (the "Lender") and
ATLANTIC BEVERAGE COMPANY, INC. ("ABC"), CARLTON FOODS CORP. ("Carlton"), PREFCO
CORP. (formerly known as ABEV Acquisition Corp.) ("Prefco"), RICHARDS CAJUN
FOODS CORP. ("Richards") and GROGAN'S MERGER CORP. ("Grogan's" and, together
with ABC, Carlton, Prefco, and Richards, collectively referred to herein as the
"Borrowers").
R E C I T A L S:
A. Pursuant to and in accordance with the terms of that certain Loan
and Security Agreement dated as of March 15, 1996, among the Lender, ABC,
Carlton and Prefco, as amended by that certain First Amendment to Loan and
Security Agreement dated as of August 1, 1996 and as modified by that certain
Joinder executed by Richards dated as of August 1, 1996, pursuant to which
Richards became a party thereto (the "Original Loan Agreement"), the Lender
agreed to make a term loan and revolving loans to ABC, Carlton, Prefco and
Richards. All initially capitalized terms not otherwise defined in this
Amendment shall have the meanings ascribed to such terms in the Original Loan
Agreement. The Original Loan Agreement as the same is amended and modified by
the terms and conditions of this Amendment is referred to herein as the "Loan
Agreement."
B. The Borrowers have requested that the Lender consent to (i) the
Grogan's Transaction, the Arizona Acquisition and the Partin's Acquisition (as
each such capitalized term is hereinafter defined), (ii) funding a portion of
the cost of the Grogan's Transaction and the Arizona Acquisition, (iii) Grogan's
becoming a party to the Loan Agreement, and (iv) making additional term loans
and increasing the amount of the Revolving Credit Commitment. The Lender has
agreed to give its consent to all of the foregoing on the terms and conditions
herein set forth.
A G R E E M E N T S:
NOW THEREFORE, in consideration of the mutual conditions and agreements
set forth in this Amendment, and for good and valuable consideration, the
receipt of which is hereby acknowledged, the Borrowers and the Lender hereby
agree as follows:
1. DEFINITIONS. Section 1.1 of the Loan Agreement is amended as follows:
<PAGE>
(A) The following definitions are hereby added to Section 1.1
in alphabetical order:
"Arizona Acquisition" shall mean the acquisition by
ABC of certain of the assets of Central Distributors, Inc., a
Maryland corporation ("CDI"), pursuant to that certain Asset
Purchase Agreement (the "Arizona Agreement") dated October 16,
1996, by and among ABC, CDI and Dominic Ciuffreda, the
principal shareholder of CDI.
"Arizona Term Loan" shall have the meaning ascribed
to it in Section 2.1(a)(iv).
"Arizona Term Note" shall have the meaning ascribed
to it in Section 2. 1(b).
"Grogan's Transaction" shall mean, collectively, (a)
the merger of Grogan's Farm, Inc., a Kentucky corporation
("GFI"), with and into Grogan's pursuant to that certain
Agreement and Plan of Reorganization dated as of October 1,
1996 by and among Grogan's, GFI, and Bobby L. Grogan and Betty
Ruth Grogan, individuals residing in the Commonwealth of
Kentucky, as a result of which Grogan's shall be the surviving
corporation, (b) the acquisition by Grogan's of certain assets
of Grogan's Sausage, Inc., a Kentucky corporation ("GSI"),
pursuant to that certain Asset Purchase Agreement dated
September 27, 1996, by and among Grogan's, GSI, and Bobby L.
Grogan and Betty Ruth Grogan and (c) the acquisition by
Grogan's of the Grogan's Property pursuant to that certain
Real Estate Purchase Agreement dated September 27, 1996 by and
among Grogan's and Bobby L. Grogan and Betty Ruth Grogan.
"Mezzanine Debt" shall mean any subordinated notes of
ABC issued after October 17, 1996 and before April 15, 1997 in
an amount and on terms and conditions satisfactory to the
Lender.
"Partin's Acquisition" shall mean the acquisition by
ABC or its assignee of certain assets of the business known as
Partin's Country Sausage in a transaction substantially in the
form as described in that certain Agreement in Principle dated
July 8, 1996 by and between ABC and Jeff Davis, an individual
residing in the Commonwealth of Kentucky.
(B) The definition of the term "Grogan's" is hereby deleted in
its entirety and the following is substituted therefor:
-2-
<PAGE>
"Grogan's" shall mean Grogan's Merger Corp., a
Delaware corporation, a wholly-owned subsidiary of ABC which,
after the merger of GFI with and into Grogan's Merger Corp.,
will change its name to Grogan's Farm, Inc.
(C) The definition of the term "Grogan's Initial Payment
Amount" is hereby deleted in its entirety and the following is
substituted therefor:
"Grogan's Initial Payment Amount" shall mean an
amount equal to (a) $100,000.00, divided by (b) the number of
whole calendar months between the Grogan Initial Payment Date
and March 15, 1997.
(D) The definition of the term "Grogan's Merger" is hereby
deleted in its entirety and each reference thereto in the Loan
Agreement shall be deemed to refer to the "Grogan's Transaction."
(E) The definition of the term "Grogan's Merger Note" is
hereby deleted in its entirety and the following is substituted
therefor:"
Grogan's Merger Note" means the promissory note in
the original principal amount of $200,000 executed by Grogan's
and payable to and for the benefit of Bobby L. Grogan and
Betty Ruth Grogan in connection with the Grogan's Transaction,
incurred on terms and conditions approved by the Lender and
which is subordinated, in a manner approved by the Lender, as
to right and time of payment of principal and interest thereon
to any and all of the Obligations.
(F) EXHIBIT A attached to the Original Loan Agreement is
hereby deleted in its entirety and EXHIBIT A attached hereto and made a
part hereof is hereby substituted therefor. As a result, the reference
to EXHIBIT A contained in the definition of the term "Borrowing Base
Certificate" and any other provision of the Loan Agreement shall be
deemed to refer to EXHIBIT A attached hereto.
(G) The definition of the term "Revolving Credit Commitment"
is hereby deleted in its entirety and the following is substituted
therefor:
"Revolving Credit Commitment" shall mean $8,500,000,
as such amount may be reduced from time to time pursuant to
Section 2.3(b) or Section 9.2 of this Agreement.
(H) The definition of the term "Term Loan" is hereby deleted
in its entirety and the following is substituted therefor:
-3-
<PAGE>
"Term Loan" shall collectively mean the Initial Term
Loan, the Richards Term Loan, the Grogan's Term Loan, the
Arizona Term Loan and any other Term Loan made hereunder.
(I) The definition of the term "Term Note" is hereby deleted
in its entirety and the following is substituted therefor:
"Term Note" shall collectively mean the Initial Term
Note, the Richards Term Note, the Grogan's Term Note, the
Arizona Term Note and any other Term Note issued hereunder.
2. AMOUNT AND FUNDING OF TERM LOAN AND REVOLVING CREDIT COMMITMENT.
(A) The amount of the Term Loan is hereby increased to
$7,900,000. As a result of and in connection with the foregoing,
Section 2.1 of the Loan Agreement is hereby amended as follows:
(i) Section 2.1(a) is hereby amended by deleting the
reference to "$7,725,000" contained in the fourth
line thereof and inserting "$7,900,000" in
substitution therefor.
(ii) Section 2.1(a)(iii) is hereby amended by deleting the
reference to "$1,825,000" contained in the first line
thereof and inserting "$1,550,000" in substitution
therefor.
(iii) The following is hereby added to Section 2.1(a)
immediately after the end of Section 2.1(a)(iii) as a
new Section 2.1(a)(iv):
"(iv) the Lender shall make $450,000 of the proceeds of the
Term Loan (the "Arizona Term Loan") available to ABC
upon satisfaction of the applicable conditions set
forth in Sections 8.2 and 2.1(c) hereof, by
transferring same day funds equal to such amount to
an account designated in writing by ABC."
(iv) Section 2.1(b) is hereby deleted in its entirety and
the following is substituted
therefor:
"(b) Term Note. The Borrowers shall execute and
deliver to Lender (i) a promissory note,
substantially in the form of EXHIBIT D attached
hereto and made a part hereof (as the same has been
or may be amended, modified, extended, and renewed
from time to time, the "Initial Term Note"), to
evidence the Initial Term Loan, (ii) a promissory
note, substantially in the form of EXHIBIT J attached
hereto and made a part hereof (as
-4-
<PAGE>
the same has been or may be amended, modified,
extended, and renewed from time to time, the
"Richards Term Note"), to evidence the Richards Term
Loan, (iii) a promissory note, substantially in the
form of EXHIBIT K attached hereto and made a part
hereof (as the same has been or may be amended,
modified, extended, and renewed from time to time,
the "Grogan's Term Note"), to evidence the Grogan's
Term Loan, and (iv) a promissory note, substantially
in the form of EXHIBIT O attached hereto and made a
part hereof (as the same has been or may be amended,
modified, extended, and renewed from time to time,
the "Arizona Term Note"), to evidence the Arizona
Term Loan. The principal amount of the Initial Term
Note shall be payable in sixty (60) consecutive
monthly installments payable on the last Business Day
of each successive calendar month commencing on March
31, 1996 with installments payable through and
including February 28, 1997 in the amount of
$66,666.67, thereafter installments payable through
and including February 28, 1998 in the amount of
$70,833.34, thereafter installments payable through
and including February 28, 1999 in the amount of
$75,000, thereafter installments payable through and
including February 29, 2000 in the amount of
$83,333.34, thereafter installments through and
including February 1, 2001 in an amount of $79,166.67
with a final installment of any and all principal
remaining on March 15, 2001. The principal amount of
the Richards Term Note shall be payable in
consecutive monthly installments payable on the last
Business Day of each successive calendar month
commencing on the last Business Day of the calendar
month in which the Richards Term Loan is advanced
(the "Richards Initial Payment Date") in accordance
with the following schedule:
<TABLE>
<CAPTION>
Monthly
Period Payment
<S> <C>
Richards Initial Payment Date Richards Initial
through February 28, 1997 Payment Amount
March 1, 1997 through February 28, 1998 $23,333.33
March 1, 1998 through February 28, 1999 $25,128.21
March 1, 1999 through February 29, 2000 $26,923.08
March 1, 2000 through February 28, 2001 $30,512.83
</TABLE>
with a final installment of any and all principal remaining on
March 15, 2001. The principal amount of the Grogan's Term Note
shall be payable in consecutive monthly installments payable
on the last
-5-
<PAGE>
Business Day of each successive calendar month
commencing on the last Business Day of the calendar
month in which the Grogan's Term Loan is advanced
(the "Grogan's Initial Payment Date") in accordance
with the following schedule:
<TABLE>
<CAPTION>
Monthly
Period Payment
<S> <C>
Grogan's Initial Payment Date Grogan's Initial
through February 28, 1997 Payment Amount
March 1, 1997 through February 28, 1998 $25,000.00
March 1, 1998 through February 28, 1999 $27,083.33
March 1, 1999 through February 29, 2000 $33,333.33
March 1, 2000 through February 28, 2001 $35,416.67
</TABLE>
with a final installment of any and all principal remaining on
March 15, 2001, or such other schedule as shall be mutually
satisfactory to the Lender and the Borrowers. The principal
amount of the Arizona Term Note shall be payable upon the
earlier to occur of (x) the issuance of the Mezzanine Debt by
ABC and (y) April 15, 1997.
(v) The heading of Section 2.1(c) is hereby amended by
inserting "and Arizona Term Loan" immediately after
"Grogan's Term Loan."
(vi) Section 2.1(c)(ii) is hereby amended by deleting "the
Grogan's Merger is approved by the Lender, (B)"
contained in the second and third lines thereof and
by deleting the reference to "(C)" contained in the
fifth line thereof and inserting "(B)" in
substitution therefor.
(vii) The following is hereby added to Section 2.1(c)
immediately after the end of Section 2.1(c)(iv) as
new Sections 2.1(c)(v) and 2.1(c)(vi):
"(v) the Lender shall not be required to fund any
portion of the Arizona Term Loan until such time as
(A) the Borrowers otherwise comply with the
conditions and requirements set forth in Section 4(B)
of the Second Amendment to this Agreement and (B) the
Borrowers shall have paid the fee due in accordance
with the terms of Section 5(F) of the Second
Amendment to this Agreement; and
(vi) the proceeds of the Arizona Term Loan may only
be used by ABC to pay amounts due and owing by ABC
(including,
-6-
<PAGE>
without limitation, fees, costs and expenses) in
connection with the Arizona Acquisition or for
working capital investments.
(viii) The final paragraph of Section 2.1(c) is hereby
deleted in its entirety and the following is
substituted therefor:
"Any request by any Borrower for the Lender to fund
any of the Richards Term Loan, the Grogan's Term Loan
or the Arizona Term Loan shall be deemed a
representation, warranty and covenant by the
Borrowers that the proceeds of such requested advance
shall solely be used for the purposes permitted by
the terms of this subparagraph (c)."
(ix) Section 2.1(d) is hereby deleted in its entirety and
the following is substituted therefor:
"(d) Outside Funding Date for Richards Term Loan
Grogan's Term Loan and Arizona Term Loan.
Notwithstanding any provision in this Agreement or
any of the other Loan Documents to the contrary, the
Borrowers shall have no right to receive, and the
Lender shall have no obligation to advance, (i) any
portion of the Richards Term Loan unless all
conditions precedent thereto are fulfilled and a
request made for the funding thereof no later than
August 30, 1996, (ii) any portion of the Grogan's
Term Loan unless all conditions precedent thereto are
fulfilled and a request made for the funding thereof
no later than October 22, 1996 or (iii) any portion
of the Arizona Term Loan unless all conditions
precedent thereto are fulfilled and a request made
for the funding thereof no later than October 24,
1996."
(B) EXHIBIT K attached to the Original Loan Agreement is
hereby deleted in its entirety and EXHIBIT K attached hereto and made a
part hereof is hereby substituted therefor. As a result, the reference
to EXHIBIT K contained in the definition of the term "Grogan's Term
Note" in Section 2.1(b) and any other provision of the Loan Agreement
shall be deemed to refer to EXHIBIT K attached hereto.
(C) EXHIBIT O attached hereto and made a part hereof is hereby
added to the Loan Agreement as EXHIBIT O. As a result, the reference to
EXHIBIT O contained in Section 2.1 or any other provision of the Loan
Agreement shall be deemed to refer to EXHIBIT O attached hereto.
(D) Section 2.2(c) is hereby amended by deleting the reference
to "$7,500,000" contained on the fifth line thereof and substituting
"$8,500,000" therefor.
-7-
<PAGE>
(E) Section 2.11 is hereby amended by deleting all of the
language after the end of the second sentence thereof.
3. AMENDMENT TO COVENANTS. The covenants of the Borrowers set forth in
Article VII of the Original Loan Agreement are hereby amended as follows:
(A) Section 7.22 is hereby amended by deleting the period
after the word "thereafter" contained in the last line thereof and by
adding the following language:
"; provided, however, that the first $100,000 of Capital
Expenditures incurred by Grogan's and, if the Arizona
Acquisition is consummated, the first $31,000 of Capital
Expenditures by ABC for purchases of New Coolers (as such term
is defined in the Arizona Asset Purchase Agreement) shall be
excluded from the computation of the aggregate amount of
Capital Expenditures incurred by all Borrowers and their
Subsidiaries."
(B) Section 7.1 is hereby amended by adding the following
language to the end thereof:
"Such Borrower shall notify Lender if it becomes aware of any
Liens on its Property. In addition, the Lender shall have the
right from time to time to cause title searches and/or
judgment searches to be conducted with respect to any Real
Property and the Borrowers shall pay all costs and expenses
incurred in connection therewith."
4. LENDER'S CONSENTS TO GROGAN'S TRANSACTION, ARIZONA ACQUISITION AND
PARTIN'S ACQUISITION.
(A) The Lender hereby consents to the Grogan's Transaction,
provided that the Borrowers and Grogan's otherwise comply with the
conditions and requirements set forth in Section 8.3 hereof with
respect to such Transaction.
(B) The Lender hereby consents to the Arizona Acquisition and
agrees to fund the Arizona Term Loan, provided that the following
conditions are satisfied:
(i) All conditions precedent to the closing of the
Arizona Acquisition set forth in the Arizona
Agreement (other than payment of the full purchase
price)shall have been satisfied;
(ii) The Borrowers shall have provided to the Lender
updated and corrected Schedules in form and substance
satisfactory to
-8-
<PAGE>
the Lender which shall be substituted for the
Schedules attached to this Agreement; and
(iii) The Lender shall have received all of the
following items:
(a) An executed copy of the Arizona
Agreement, together with all attachments
thereto and all bills of sale, agreements,
instruments and other documents required
under Section 7 thereof to be delivered by
any party as a condition to closing,
certified by ABC to be true, complete and
correct copies thereof.
(b) Lien searches against CDI and the Owner
(as such capitalized term is defined in the
Arizona Agreement) satisfactory to the
Lender.
(c) A certificate of the President of CDI
and a letter from the Owner, in each case
dated the Closing Date (as such capitalized
term is defined in the Arizona Agreement)
certifying that (a) the Arizona Agreement is
in full force and effect and no material
term or condition thereof has been amended,
from the form thereof delivered to the
Lender, or waived, except as disclosed to
the Lender or its counsel prior to the
Closing Date, (b) they and, to the best of
their knowledge, the other parties thereto
have performed or complied in all material
respects with all agreements and conditions
contained in the Arizona Agreement and any
agreements or documents referred to therein
required to be performed or complied with by
each of them on or before the requested
funding on the Closing Date, and (c) subject
to the foregoing, neither they nor, to the
best of their knowledge, such other parties
are in default in the performance or
compliance with any of the material terms or
provisions thereof (except to the extent
that performance thereof or compliance
therewith or default has been waived with
the prior written consent of the Lender).
(d) The Arizona Term Note, duly executed by
all of the Borrowers;
(e) A certificate signed by the chairman,
vice chairman, or chief executive officer
and the chief financial officer or treasurer
of each Borrower (i) reaffirming and
remaking each of the representations and
warranties
-9-
<PAGE>
made in Article VI of this Agreement, which
representations and warranties shall be
deemed to be remade as of the date thereof,
subject only to the fact that the same shall
be deemed to be modified by substitute
Schedules satisfactory to the Lender
provided by the Borrowers in accordance with
the terms of Section 4(B)(ii) hereof, and
(ii) certifying that the conditions
specified in this Section 4(B) have been
fulfilled.
(C) The Lender hereby consents to the Partin's Acquisition and
agrees that the Borrowers may use the proceeds of Loans in connection
therewith, provided that the following conditions are satisfied:
(i) All documents to be executed and delivered in
connection with the Partin's Acquisition
(collectively, the "Partin's Documents") shall be in
form and substance satisfactory to Lender;
(ii) All conditions precedent to the closing of the
Partin's Acquisition set forth in the Partin's
Documents (other than payment of the full purchase
price) shall have been satisfied;
(iii) The Borrowers shall have provided to the Lender
updated and corrected Schedules in form and substance
satisfactory to the Lender which shall be substituted
for the Schedules attached to this Agreement; and
(iv) The Lender shall have received all of the
following items:
(a) Executed copies of the Partin's
Documents, certified by ABC and, if an
assignee of ABC is a party to such
documents, by such assignee, to be true,
complete and correct copies thereof;
(b) Lien searches against Partin's and Jeff
Davis satisfactory to the Lender.
(c) A letter from Jeff Davis dated the
closing date of the Partin's Acquisition
(the "Partin's Closing Date") certifying
that (a) the Partin's Documents are in full
force and effect and no material term or
condition thereof has been amended, from the
forms thereof delivered to the Lender, or
waived, except as disclosed to the Lender or
its counsel prior to the Partin's Closing
Date, (b) he and, to the best of his
knowledge, the other parties thereto have
-10-
<PAGE>
performed or complied in all material
respects with all agreements and conditions
contained in the Partin's Documents and any
agreements or documents referred to therein
required to be performed or complied with by
each of them on or before the requested
funding on the Partin's Closing Date, and
(c) subject to the foregoing, neither he
nor, to the best of his knowledge, such
other parties are in default in the
performance or compliance with any of the
material terms or provisions thereof (except
to the extent that performance thereof or
compliance therewith or default has been
waived with the prior written consent of the
Lender).
(d) A certificate signed by the chairman,
vice chairman, or chief executive officer
and the chief financial officer or treasurer
of each Borrower (i) reaffirming and
remaking each of the representations and
warranties made in Article VI of this
Agreement, which representations and
warranties shall be deemed to be remade as
of the date thereof, subject only to the
fact that the same shall be deemed to be
modified by substitute Schedules
satisfactory to the Lender provided by the
Borrowers in accordance with the terms of
Section (4)(C)(iii) hereof, and (ii)
certifying that the conditions specified in
this Section 4(C) have been fulfilled.
5. EFFECTIVENESS OF THIS AMENDMENT. The Lender and the Borrowers agree
that the terms of this Amendment shall not be effective (and the Lender shall
have no obligations under this Amendment) unless and until all of the following
conditions have either been fulfilled in a manner satisfactory to the Lender or
waived in writing by the Lender:
(A) The Lender shall have received all items on the List of
Closing Documents attached hereto and made a part hereof as EXHIBIT P-1
(deliveries required for the Grogan's Transaction and this Amendment),
such items to be in form and substance satisfactory to the Lender, and
to be executed by all parties thereto when the nature of such items so
requires.
(B) The Borrowers shall have paid to the Lender all costs and
expenses incurred as of the date hereof in connection with this
Agreement and the other documents and instruments executed in
connection herewith or contemplated by the terms hereof (collectively,
the "Amendment Documents") or otherwise in connection with the Loan
which the Borrowers are obligated to pay pursuant to the terms of
Section 12.7 of the Loan Agreement.
-11-
<PAGE>
(C) All proceedings taken in connection with the execution of
this Amendment, all other Amendment Documents, and all documents and
papers relating thereto shall be satisfactory to the Lender. The Lender
shall have received copies of such documents and papers as the Lender
may reasonably request in connection therewith, all in form and
substance satisfactory to the Lender.
(D) The Lender shall have received a certificate dated as of
the date hereof and signed by the chairman, vice chairman or chief
executive officer and the chief financial officer or treasurer of each
Borrower certifying that the conditions specified in this Section 5
have been fulfilled.
(E) The Borrowers shall have provided to the Lender updated
and corrected Schedules in form and substance satisfactory to the
Lender which shall be substituted for the Schedules attached to the
Original Loan Agreement.
(F) The Borrowers shall have paid to the Lender a closing fee
in the amount of $35,000 in connection with the Lender's agreement (i)
to increase the amount of the Revolving Credit Commitment, (ii) to fund
the Grogan's Term Loan and (iii) to fund the Arizona Term Loan.
(G) The Borrowers shall have duly executed and delivered to
the Lender a promissory note, substantially in the form of EXHIBIT R
attached hereto and made a part hereof (as the same has been or may be
amended, modified, extended, and renewed from time to time, the
"Substitute Revolving Credit Note"), to evidence the increase m the
Revolving Credit Commitment and to replace the exiting Revolving Credit
Note. Upon the Borrowers complying with the foregoing, (i) the Lender
will return to the Borrowers the existing Revolving Credit Note, marked
"cancelled" and (ii) all references in the Loan Agreement to the
Revolving Credit Note shall be deemed to refer to the Substitute
Revolving Credit Note.
6. REPRESENTATIONS AND WARRANTIES. To induce the Lender to amend the
Loan Agreement and to consider making future Loans thereunder, Borrowers
represent and warrant to the Lender that:
(A) There are no Defaults or Events of Default with respect to
any Borrower under the Loan Agreement or any of the other Loan
Documents.
(B) Except as otherwise expressly set forth herein or in the
other Amendment Documents, none of the Loan Documents have been
heretofore amended, modified, changed, supplemented, renewed, replaced,
or terminated and none of the Borrowers' obligations under any of the
Loan Documents has been changed, terminated, forgiven or modified in
any way.
-12-
<PAGE>
(C) The pro forma balance sheet provided by the Borrowers in
accordance with the requirements of EXHIBIT P-1 presents fairly and
accurately in all material respects the Borrowers' financial condition
as at such date as if the transactions contemplated by the Grogan's
Transaction and the Arizona Acquisition have occurred on such date, the
Grogan's Term Loan and the Arizona Term Loan had been funded as of such
date, and the Revolving Credit Commitment had been increased in
accordance with the terms hereof as of such date.
(D) On the date hereof, the representations and warranties set
forth in the Loan Agreement (as modified by this Amendment) and in all
other Loan Documents are true and correct with the same effect as
though such representations and warranties had been made on the date
hereof (except to the extent that the same are specifically made as of
an earlier date).
7. POST-CLOSING RESTATEMENT OF CERTAIN TERM NOTES. The Borrowers agree
that, within 30 calendar days after the date hereof, they will deliver to Lender
(A) a promissory note, executed by all of the Borrowers, in a principal amount
equal to the aggregate principal amount of the Initial Term Loan, the Richards
Term Loan and the Grogan's Term Loan and having an amortization schedule
reflecting the combined amortization schedules thereof (such promissory note,
the "Restated Term Note), which Restated Term Note will replace the Initial Term
Note, the Richards Term Note, and the Grogan's Term Note, (B) any documents
required by the Lender to be executed by the Borrowers to amend the Loan
Agreement in connection with the Restated Term Note, and (C) a legal opinion of
counsel to the Borrowers in form and substance satisfactory to the Lender and
its counsel. Upon the Borrowers complying with the foregoing, the Lender will
return to the Borrowers the Initial Term Note, the Richards Term Note and the
Grogan's Term Note, in each case marked "cancelled."
8. INDEMNITY. The Borrowers agree to reimburse the Lender for any costs
and expenses (including, without limitation, reasonable attorneys' and
paralegals' fees and expenses) incurred by the Lender in defending any suit
brought against it by any Borrower or any other Person in connection with the
transactions contemplated by this Amendment and the other Amendment Documents.
All of the foregoing fees, costs and expenses shall be part of the Obligations,
payable upon demand, and secured by the Collateral.
9. MISCELLANEOUS.
(A) This Amendment may be executed in any number of
counterparts, and by the Lender and each of the Borrowers in separate
counterparts, each of which shall be an original, but all of which
shall together constitute one and the same agreement.
-13-
<PAGE>
(B) The captions contained in this Amendment are for
convenience only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
(C) All obligations of the Borrowers under this Amendment
shall be joint and several obligations of the Borrowers. Each Borrower
shall be liable for the full amount of the Obligations with the rights
of contribution and reimbursement against the other Borrowers under
Section 12.13 of the Loan Agreement.
(D) Any reference in the Loan Agreement to the term
"Agreement," "Note," "Loan Documents," or any other term used to
describe any one or more of the Loan Documents shall be deemed to refer
to the applicable documents as the same are modified by the terms of
this Amendment and the other Amendment Documents. Any provision in any
of the Loan Documents which have been rendered inconsistent with any
other provision of Loan Documents as a result of the amendments and
modifications effectuated by this Amendment shall be deemed amended and
modified so as to be consistent with the terms and conditions of this
Amendment.
(E) Except to the extent that the Loan Agreement is expressly
amended and modified by the terms of this Amendment, the Loan Agreement
is and shall remain unmodified and in full force and effect.
IN WITNESS WHEREOF, the parties have entered into this Agreement on the
date first above written.
ATLANTIC BEVERAGE COMPANY, INC.
By:_____________________________
Merrick M. Elfman
Title: Chairman
PREFCO CORP.
By:_____________________________
Merrick M. Elfman
Title: Chairman
-14-
<PAGE>
CARLTON FOODS CORP.
By:_____________________________
Merrick M. Elfman
Title: Chairman
RICHARDS CAJUN FOODS CORP.
By:_____________________________
Merrick M. Elfman
Title: Chairman
GROGAN'S MERGER CORP.
By:_____________________________
Merrick M. Elfman
Title: Chairman
LASALLE NATIONAL BANK
By:_____________________________
Title:_____________________
-15-
<PAGE>
EXHIBIT A
BORROWING BASE CERTIFICATE
-16-
<PAGE>
EXHIBIT K
FORM OF GROGAN'S TERM NOTE
US $1,550,000 Dated: October __, 1996
FOR VALUE RECEIVED, the undersigned, ATLANTIC BEVERAGE COMPANY, INC., a
Delaware corporation, CARLTON FOODS CORP., a Delaware corporation, PREFCO CORP.,
a Delaware corporation, RICHARDS CAJUN FOODS CORP., a Delaware corporation, and
GROGAN'S MERGER CORP., a Delaware corporation (collectively referred to herein
as the "Borrowers"), jointly and severally hereby promise to pay to the order of
LaSalle National Bank (the "Lender") the principal amount of One Million Five
Hundred Fifty Thousand and 00/100 Dollars ($1,550,000). Capitalized terms used
herein have the meanings specified for such terms in the Loan Agreement (as
defined below).
The principal amount of this Grogan's Term Note ("Term Note") shall be
payable in consecutive monthly installments payable on the last Business Day of
each successive calendar month commencing on the last Business Day of the
calendar month in which the Grogan's Term Loan is advanced (the "Grogan's
Initial Payment Date") in accordance with the following schedule:
Monthly
Period Payment
Grogan's Initial Payment Date Grogan's Initial
through February 28, 1997 Payment Amount
March 1, 1997 through February 28, 1998 $25,000.00
March 1, 1998 through February 28, 1999 $27,083.33
March 1, 1999 through February 29, 2000 $33,333.33
March 1, 2000 through February 28, 2001 $35,416.67
with a final installment of any and all principal remaining on March 15, 2001.
As used herein the term "Grogan's Initial Payment Amount" shall mean an amount
equal to (a) $100,000, divided by (b) the number of whole calendar months
between the Grogan Initial Payment Date and March 15, 1997.
The Borrowers, jointly and severally, promise to pay interest on the
unpaid principal amount of this Term Note from the Funding Date with respect
hereto until such principal amount is paid in full, at such interest rates, and
payable at such times, as are specified in the Loan Agreement.
-17-
<PAGE>
Both principal and interest are payable in lawful money of the United
States of America to LaSalle National Bank, at 120 South LaSalle Street,
Chicago, Illinois 60603, in same day funds. All payments made on account of
principal hereof shall be recorded by the Lender and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Term Note.
This Term Note is one of the Term Notes referred to in, and is entitled
to the benefits of, the Loan and Security Agreement dated as of March 15, 1996
(as amended by the First Amendment to Loan and Security Agreement dated as of
August 1, 1996, and by the Second Amendment to Loan and Security Agreement dated
as of October 17, 1996, and all further amendments, modifications, changes,
supplements, renewals or replacements, the "Loan Agreement") by and between the
Borrowers and the Lender. The Loan Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
IN WITNESS WHEREOF, the undersigned have executed this Term Note.
ATLANTIC BEVERAGE COMPANY, INC.
By:______________________________
Merrick M. Elfman
Title: Chairman
CARLTON FOODS CORP.
By:______________________________
Merrick M. Elfman
Title: Chairman
PREFCO CORP.
By:______________________________
Merrick M. Elfman
Title: Chairman
-18-
<PAGE>
RICHARDS CAJUN FOODS CORP.
By:______________________________
Merrick M. Elfman
Title: Chairman
GROGAN'S MERGER CORP.
By:______________________________
Merrick M. Elfman
Title: Chairman
-19-
<PAGE>
EXHIBIT P-1
LIST OF CLOSING ITEMS FOR GROGAN'S TRANSACTION AND
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
As used herein, "Grogan's Transaction" shall mean, collectively, (a)
the merger of Grogan's Farm, Inc. with and into Grogan's Merger Corp. ("Merger
Corp."), in which Merger Corp. shall be the sole survivor, (b) the acquisition
by Merger Corp. of substantially all of the assets of Grogan's Sausage, Inc.,
and (c) the acquisition of the Grogan's Property by Merger Corp. from Bobby and
Betty Grogan. Other capitalized terms shall have the meanings set forth in the
Loan and Security Agreement dated as of March 15, 1996, as amended by the First
Amendment to Loan and Security Agreement dated as of August 1, 1996.
A. LOAN DOCUMENTS
1. Second Amendment to Loan Agreement executed by Merger Corp. and all
of the other Borrowers.
1a. Second Amendment to Stock Pledge Agreement, executed by ABC, and
Schedule 1 thereto.
lb. Substitute Revolving Credit Note, executed by Merger Corp. and all
of the other Borrowers.
2. Grogan's Term Note executed by Merger Corp. and all of the other
Borrowers in the amount of $1,550,000.
3. Endorsements to each Note other than the Grogan's Term Note executed
by Merger Corp.
4. Joinder to Loan Agreement executed by Merger Corp.
5. A Notice of Borrowing and Disbursement Directions with respect to
the Grogan's Term Loan and any Revolving Loan to be made on the date of the
Grogan's Transaction, executed by ABC.
6. Application for and copy of the Letter of Credit relating to the
bonding requirements under the Packers and Stockyards Act.
B. OTHER SECURITY AND GUARANTY DOCUMENTS
7. Vehicle titles covering all owned vehicles of Merger Corp. with
appropriate documentation duly executed in order to have the Lender's lien
notated thereon.
-20-
<PAGE>
8. Stock certificates relating to the issued and outstanding shares of
Merger Corp., and stock powers relating to those certificates, undated and duly
endorsed in blank.
C. REAL ESTATE COLLATERAL DOCUMENTS
9. Mortgage on the Grogan's Property.
10. ALTA Survey of Grogan's Property certified to the Lender.
11. Title insurance policy for Grogan's Property, satisfactory to the
Lender.
12. [No structural or engineering reports for Grogan's Property.]
13. [No Landlord waivers]
D. CORPORATE DOCUMENTS
14. Certificate or Articles of Incorporation for Merger Corp., Grogan's
Farm, Inc., and Grogan's Sausage, Inc. as amended, modified or supplemented to
the date the Grogan's Transaction is consummated (the "Consummation Date"),
certified to be true, correct and complete by the Secretary of State of such
entity's state of incorporation as of a recent date prior to the Consummation
Date, together with a good standing certificate from the Secretary of State of
such entity's state of incorporation and a good standing certificate from the
Secretaries of State (or the equivalent thereof) of each other State in which
each is qualified to transact business, each to be dated a recent date prior to
the Consummation Date.
15. A certificate of the Secretary or Assistant Secretary of each
Borrower (Atlantic Beverage Company, Inc., Carlton Foods Corp., Prefco Corp.,
Richards Cajun Foods Corp., and Merger Corp.) dated the Consummation Date
certifying (a) the names and true signatures of the incumbent officers of such
Borrower authorized to sign the Loan Documents, (b) the bylaws of such Borrower
as in effect on the date of such certification, (c) that attached thereto is a
true and complete copy of the resolutions of such Borrower's Board of Directors
approving and authorizing the execution, delivery and performance of the Loan
Documents and the execution of the Grogan's Term Note (and, in the case of
Merger Corp. and any other Borrower that is a party to the Affiliate Party
Acquisition Documents, the Affiliate Party Acquisition Documents) executed by
such Borrower, (d) in the case of Merger Corp., that attached thereto is a true
and complete copy of the resolutions of its Board of Directors approving and
authorizing the merger of Grogan's Farm, Inc. with and into Merger Corp. and the
change of the name of Merger Corp. to "Grogan's Farm, Inc." immediately after
such merger and (e) that there have been no changes in the Certificate of
Incorporation of such Borrower since the date of the
-21-
<PAGE>
most recent certification thereof by the Secretary of State of such Borrower's
state of incorporation.
16. A certificate of the Secretary or Assistant Secretary of Grogan's
Farm, Inc. and of Grogan's Sausage, Inc. dated the Consummation Date certifying
(a) the By-laws of such entity as in effect on the date of such certification,
(b) that there have been no changes in the Certificate or Articles of
Incorporation of such entity since the date of the most recent certification
thereof by the Secretary of State of such entity's state of incorporation and
(c) that attached thereto is a true and complete copy of the resolutions of such
entity's Board of Directors approving and authorizing the execution, delivery
and performance of the Affiliate Party Acquisition Documents executed by such
entity and approving and authorizing, in the case of Grogan's Farm, Inc., the
merger with and into Merger Corp. and, in the case of Grogan's Sausage, Inc.,
the sale of substantially all of its assets to Merger Corp.
17. A copy of the Certificate of Merger filed with the Secretary of
State of Delaware, evidencing the merger of Grogan's Farm, Inc. with and into
Merger Corp., in the form filed with the Secretary of State of Delaware.
18. A copy of the Certificate or Articles of Merger filed with the
Secretary of State of Kentucky, evidencing the merger of Grogan's Farm, Inc.
with and into Merger Corp., in the form filed with the Secretary of State of
Kentucky.
19. A Certificate of the President of each of Grogan's Farm, Inc. and
Grogan's Sausage, Inc. and a letter from Bobby and Betty Grogan, in each case
dated the Consummation Date, certifying that (a) the applicable Affiliate Party
Acquisition Documents (including, without limitation, the Grogan's Merger Note)
are in full force and effect and no material term or condition thereof has been
amended, from the form thereof delivered to the Lender, or waived, except as
disclosed to the Lender or its counsel prior to the Consummation Date, (b) they
and, to the best of their knowledge, the other parties thereto have performed or
complied in all material respects with all agreements and conditions contained
in the applicable Affiliate Party Acquisition Documents and any agreements or
documents referred to therein required to be performed or complied with by each
of them on or before the requested funding on the Consummation Date, and (c)
subject to the foregoing, neither they nor, to the best of their knowledge, such
other parties are in default in the performance or compliance with any of the
material terms or provisions thereof (except to the extent that performance
thereof or compliance therewith or default has been waived with the prior
written consent of the Lender).
20. A Financial Condition Certificate dated the Consummation Date,
signed by the chief executive officer of each Borrower certifying, among other
things, that such Borrower is Solvent on the Consummation Date after giving
effect to any new funding under the Loan Agreement, the issuance of the Urogan's
Merger
-22-
<PAGE>
Note and any capital contribution noted in item 26 below as any of the
foregoing are required by the Affiliate Party Acquisition Documents and
consummation of the Grogan's Transaction and the consummation of the Arizona
Acquisition.
E. SUBORDINATED DEBT DOCUMENTS
21. Subordination Agreement covering the Grogan's Merger Note, together
with a copy of the Grogan's Merger Note.
F. OPINIONS
22. Opinion of Thomas D. Wippman, counsel to Borrowers, addressed to
the Lender.
23. Opinion of Gary B. Houston, counsel to Grogan's Farm, Inc.,
Grogan's Sausage, Inc. and Bobby and Betty Grogan, addressed to the Lender.
24. An opinion of local counsel with respect to the Grogan's Property,
addressed to the Lender.
G. ENVIRONMENTAL DOCUMENTS
25. Phase I Environmental Assessment Report on the Grogan's Property.
H. MISCELLANEOUS
26. Lender Loss Payable Endorsement(s) relating to casualty insurance
policies covering the Collateral obtained in the Grogan's Transaction or other
satisfactory evidence that such endorsements are effective (with copies of
certificates of insurance attached).
27. Certified copies of the proforma balance sheets of Borrowers as of
the Consummation Date, after giving effect to the Grogan's Transaction and the
Arizona Acquisition (together with current projected balance sheets and
forecasts of income, earnings and cash flow through 2000), which will be
attached to financial condition certificates.
28. [Payoff Letters - none]
29. A Certificate executed and delivered by the president or chief
operating officer and by the chief financial officer or treasurer of each
Borrower, certifying that, after giving effect to new funding under the Loan
Agreement, the issuance of the Grogan's Merger Note and any capital contribution
referred to in item 26 above as any of the foregoing are required by the
Affiliate Party Acquisition Documents and the consummation of the Grogan's
Transaction, no Event of Default or Default exists or would occur as a result
therefrom.
-23-
<PAGE>
30. Blocked Account Agreement with Merger Corp.'s local bank.
31. [NO BAILEE LETTER]
32. A copy of all Employment Agreements for chief executives of Merger
Corp.
I. UCC LIEN TAX AND JUDGMENT SEARCHES AND FILINGS
33. UCC lien, tax lien and judgment searches in the following offices,
where applicable, against Merger Corp., Urogan's Farm, Inc., Grogan's Sausage,
Inc. and Bobby and Betty Grogan:
a. County Clerk of Carlisle County, Kentucky
b. Secretary of State of Kentucky and other states in which
any of the foregoing conduct business
34. UCC-1 Financing Statements filed against Merger Corp. in the
following offices, together with acknowledgement copies or other evidence of
filing:
a. County Clerk of Carlisle County, Kentucky - regular filing
and fixture filing
b. Secretary of State of Kentucky and other states in which
Merger Corp. will conduct business
35. Vehicle Lien Statements or UCC-1 Financing Statements filed against
Merger Corp. and Grogan's Sausage, Inc. for the acquired vehicles, as
applicable, in the appropriate office as required by the state.
36. Post-Closing UCC Lien Searches against Merger Corp. in the
jurisdictions listed in items 33 and 34 above.
J. ACQUISITION DOCUMENTS
37. Amendment to Tax Sharing Agreement to take account of Grogan's
Transaction.
K. FURTHER MISCELLANEOUS
38. Post-Closing Undertaking Letter.
39. Certified copies of the Acquisition Documents.
40. Updated and corrected Schedules to the Loan Agreement.
-24-
<PAGE>
41. Certificate and Agreement, in the form of Exhibit O to the Loan
Agreement, executed by the Borrowers.
42. Certificate signed by the Chairman, Vice chairman or Chief
Executive Officer and the Chief Financial Officer or Treasurer of each Borrower
certifying that the conditions specified in Section 5 of the Second Amendment
have been fulfilled.
-25-
<PAGE>
EXHIBIT O
FORM OF ARIZONA TERM NOTE
US $450,000 Dated: October __, 1996
FOR VALUE RECEIVED, the undersigned, ATLANTIC BEVERAGE
COMPANY, INC., a Delaware corporation, CARLTON FOODS CORP., a Delaware
corporation, PREFCO CORP., a Delaware corporation, RICHARDS CAJUN FOODS CORP., a
Delaware corporation, and GROGAN'S MERGER CORP., a Delaware corporation
(collectively referred to herein as the "Borrowers"), jointly and severally
hereby promise to pay to the order of LaSalle National Bank (the "Lender") the
principal amount of Four Hundred Fifty Thousand and 00/100 Dollars ($450,000).
Capitalized terms used herein have the meanings specified for such terms in the
Loan Agreement (as defined below).
The principal amount of this Arizona Term Note ("Term Note")
shall be payable on the earlier to occur of (a) the issuance of the Mezzanine
Debt and (b) April 15, 1997.
The Borrowers, jointly and severally, promise to pay interest
on the unpaid principal amount of this Term Note from the Funding Date with
respect hereto until such principal amount is paid in full, at such interest
rates, and payable at such times, as are specified in the Loan Agreement.
Both principal and interest are payable in lawful money of the
United States of America to LaSalle National Bank, at 120 South LaSalle Street,
Chicago, Illinois 60603, in same day funds. All payments made on account of
principal hereof shall be recorded by the Lender and, prior to any transfer
hereof, endorsed on the grid attached hereto which is part of this Term Note.
This Term Note is one of the Term Notes referred to in, and is
entitled to the benefits of, the Loan and Security Agreement dated as of March
15, 1996 (as amended by the First Amendment to Loan and Security Agreement dated
as of August 1, 1996, and by the Second Amendment to Loan and Security Agreement
dated as of October 17, 1996, and all further amendments, modifications,
changes, supplements, renewals or replacements, the "Loan Agreement") by and
between the Borrowers and the Lender. The Loan Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events and also for prepayments on account of principal hereof
prior to the maturity hereof upon the terms and conditions therein specified.
-26-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Term
Note.
ATLANTIC BEVERAGE COMPANY, INC.
By:__________________________________
Merrick M. Elfman
Title: Chairman
CARLTON FOODS CORP.
By:__________________________________
Merrick M. Elfman
Title: Chairman
PREFCO CORP.
By:__________________________________
Merrick M. Elfman
Title: Chairman
RICHARDS CAJUN FOODS CORP.
By:__________________________________
Merrick M. Elfman
Title: Chairman
GROGAN'S MERGER CORP.
By:__________________________________
Merrick M. Elfman
Title: Chairman
-27-
<PAGE>
EXHIBIT R
FORM OF SUBSTITUTE REVOLVING CREDIT NOTE
US $8,500,000 Dated: October 17, 1996
FOR VALUE RECEIVED, the undersigned, ATLANTIC BEVERAGE
COMPANY, INC., a Delaware corporation, CARLTON FOODS CORP., a Delaware
corporation, PREFCO CORP., a Delaware corporation, RICHARDS CAJUN FOOD CORP., a
Delaware Corporation and GROGAN'S MERGER CORP., a Delaware corporation
(collectively referred to herein as the "Borrowers"), jointly and severally
hereby promise to pay to the order of LaSalle National Bank (the "Lender") the
principal amount of each Revolving Loan (as defined in the Loan Agreement
referred to below) made by the Lender to the Borrowers pursuant to the Loan
Agreement (as defined below) when required by the Loan Agreement and in full on
the Revolving Credit Termination Date (as defined in the Loan Agreement).
Capitalized terms used herein have the meanings specified in the Loan Agreement
(as defined below).
The Borrowers, jointly and severally, promise to pay interest
on the unpaid principal amount of each Revolving Loan from the date of such Loan
until such principal amount is paid in full, at such interest rates, and payable
at such times, as are specified in the Loan Agreement.
Both principal and interest are payable in lawful money of the
United States of America to LaSalle National Bank, at 120 South LaSalle Street,
Chicago, Illinois 60603, in same day funds. Each Revolving Loan made by the
Lender to the Borrowers and the maturity thereof, and all payments made on
account of principal thereof, shall be recorded by the Lender and, prior to any
transfer hereof, endorsed on the grid attached hereto which is part of this
Revolving Loan Note.
This Substitute Revolving Credit Note is the Revolving Credit
Note referred to in, and is entitled to the benefits of, the Loan and Security
Agreement dated as of March 15, 1996 (as amended by the First Amendment to Loan
and Security Agreement dated as of August 1, 1996, by the Second Amendment to
Loan and Security Agreement dated as of October 17, 1996 and by all further
amendments, modifications, changes, supplements, renewals or replacements, the
"Loan Agreement") by and among the Borrowers and the Lender. The Loan Agreement,
among other things, (i) provides for the making of Revolving Loans by the Lender
to the Borrowers from time to time in an aggregate amount not to exceed at any
time outstanding the U.S. dollar amount first above mentioned, the indebtedness
of the Borrowers resulting from each such Revolving Loan being
- -28-
<PAGE>
evidenced by this Substitute Revolving Credit Note, and (ii) contains provisions
for acceleration of the maturity hereof upon the happening of certain stated
events and also for prepayments on account of principal hereof prior to the
maturity hereof upon the terms and conditions therein specified.
The unpaid balance of the indebtedness evidenced, until the
date hereof, by that certain Substitute Revolving Credit Note dated August 1,
1996 in the original principal amount of $7,500,000 (the "Original Note") made
by the Borrowers and delivered to the Lender remains outstanding as of the date
hereof and shall continue to be secured pursuant to the terms of the Loan
Agreement and the Loan Documents (as defined in the Loan Agreement). The
principal balance of this Note includes all of the Borrowers' indebtedness
evidenced, until the date hereof, by the Original Note, is given in substitution
for, and not as payment of the Original Note, and is not intended to constitute
a novation of the Original Note.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-29-
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this
Substitute Revolving Credit Note.
ATLANTIC BEVERAGE COMPANY, INC.
By:__________________________________
Merrick M. Elfman
Title: Chairman
PREFCO CORP.
By:__________________________________
Merrick M. Elfman
Title: Chairman
CARLTON FOODS CORP.
By:__________________________________
Merrick M. Elfman
Title: Chairman
RICHARDS CAJUN FOODS CORP.
By:__________________________________
Merrick M. Elfman
Title: Chairman
GROGAN'S MERGER CORP.
By:_________________________________
Merrick M. Elfman
Title: Chairman
<PAGE>
<TABLE>
<CAPTION>
Type Amount Interest Amount Unpaid
of of Period of Principal Notation
Date Loan Loan (if applicable) Principal Paid Balance made by
- ---- ---- ---- --------------- -------------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
- ---- ---- ---- --------------- -------------- ------- -------
<PAGE>
</TABLE>
EXHIBIT 2.19
<PAGE>
SECOND AMENDMENT TO STOCK PLEDGE AGREEMENT
This Second Amendment to Stock Pledge Agreement (this "Amendment") is
made as of the 17th day of October, 1996, by and between Atlantic Beverage
Company, Inc., a Delaware corporation ("Pledgor") and LaSalle National Bank
("Lender").
PRELIMINARY STATEMENTS
A. Pledgor has executed and delivered to Lender that certain Stock
Pledge Agreement dated as of March 15, 1996, as amended by that certain
Amendment to Stock Pledge Agreement dated as of August 1, 1996 (as amended, the
"Stock Pledge Agreement").
B. Pledgor wishes to provide additional "Pledged Collateral" (as defined in
the Stock Pledge Agreement) to the Lender as provided in paragraph 1 of the
Stock Pledge Agreement.
NOW, THEREFORE, in consideration of the foregoing, the Pledgor and
Lender agree to amend the Stock Pledge Agreement as follows:
1. Schedule 1 attached to the Stock Pledge Agreement is hereby deleted
in its entirety and a new Schedule 1 in the form attached hereto shall be
substituted therefor.
Except as specifically amended hereby, the terms and conditions of the
Stock Pledge Agreement are in all respects ratified and confirmed and remain in
full force and effect.
IN WITNESS WHEREOF, the Pledgor and Lender have executed this
Amendment.
PLEDGOR:
ATLANTIC BEVERAGE COMPANY INC.
By:______________________________________
Merrick M. Elfman
Title: Chairman
LENDER:
LASALLE NATIONAL BANK
By:______________________________________
Title:___________________________________
<PAGE>
SCHEDULE 1
Richards Cajun Foods Corp.
Grogan's Merger Corp. (to be renamed Grogan's Farm, Inc.)
